Document and Entity Information
Document and Entity Information - USD ($) | 12 Months Ended | ||
Oct. 31, 2020 | Feb. 16, 2021 | Apr. 30, 2020 | |
Cover [Abstract] | |||
Document Type | 10-K | ||
Document Period End Date | Oct. 31, 2020 | ||
Entity Registrant Name | Granite Falls Energy, LLC | ||
Entity Well-known Seasoned Issuer | No | ||
Entity Voluntary Filers | No | ||
Entity Current Reporting Status | Yes | ||
Entity Filer Category | Non-accelerated Filer | ||
Entity Interactive Data Current | Yes | ||
Entity Small Business | true | ||
Entity Emerging Growth Company | false | ||
Entity Shell Company | false | ||
Entity Public Float | $ 20,094,000 | ||
Entity Common Stock, Shares Outstanding | 30,606 | ||
Current Fiscal Year End Date | --10-31 | ||
Entity Central Index Key | 0001181749 | ||
Document Fiscal Year Focus | 2020 | ||
Document Fiscal Period Focus | FY | ||
Amendment Flag | false |
Consolidated Balance Sheets
Consolidated Balance Sheets - USD ($) | Oct. 31, 2020 | Oct. 31, 2019 |
Current Assets | ||
Cash | $ 11,423,427 | $ 13,521,774 |
Restricted cash | 2,156,694 | 52,516 |
Accounts receivable | 3,386,068 | 7,427,895 |
Inventory | 13,791,805 | 13,803,025 |
Commodity derivative instruments | 56,050 | 823,098 |
Prepaid expenses and other current assets | 901,384 | 534,948 |
Total current assets | 31,715,428 | 36,163,256 |
Property, Plant and Equipment | ||
Property and Equipment, net | 54,965,983 | 58,269,142 |
Goodwill | 1,372,473 | |
Investments | 9,799,384 | 9,327,584 |
Operating lease right of use assets | 19,383,654 | |
Other Assets | 333,254 | 922,254 |
Total Assets | 116,197,703 | 106,054,709 |
Current Liabilities | ||
Current maturities of long-term debt | 12,954,538 | 1,405,406 |
Checks drawn in excess of bank balances | 692,984 | |
Accounts payable | 12,294,097 | 11,168,471 |
Commodity derivative instruments | 816,478 | |
Accrued expenses | 865,883 | 780,795 |
Operating lease, current liabilities | 3,628,259 | |
Total current liabilities | 31,252,239 | 13,354,672 |
Long-Term Debt, less current portion | 5,876,318 | 6,639,488 |
Operating Lease, long-term liabilities | 15,755,395 | |
Other Long-Term Liabilities | 1,421,924 | 1,376,000 |
Commitments and Contingencies | ||
Members' equity attributable to Granite Falls Energy, LLC consists of 30,606 units authorized, issued, and outstanding at both October 31, 2020 and October 31, 2019 | 52,111,525 | 65,468,635 |
Non-controlling interest | 9,780,302 | 19,215,914 |
Total members' equity | 61,891,827 | 84,684,549 |
Total Liabilities and Members' Equity | $ 116,197,703 | $ 106,054,709 |
Consolidated Balance Sheets (Pa
Consolidated Balance Sheets (Parenthetical) - shares | Oct. 31, 2020 | Oct. 31, 2019 |
Consolidated Balance Sheets | ||
Common Units Authorized | 30,606 | 30,606 |
Common Units Issued | 30,606 | 30,606 |
Common Units Outstanding | 30,606 | 30,606 |
Consolidated Statements of Oper
Consolidated Statements of Operations - USD ($) | 12 Months Ended | |
Oct. 31, 2020 | Oct. 31, 2019 | |
Consolidated Statements of Operations | ||
Revenues | $ 164,953,841 | $ 208,777,119 |
Cost of Goods Sold | 176,031,094 | 212,560,274 |
Gross Loss | (11,077,253) | (3,783,155) |
Operating Expenses | 8,580,559 | 6,493,422 |
Goodwill Impairment | 1,372,473 | |
Operating Loss | (21,030,285) | (10,276,577) |
Other Income (Expense): | ||
Other income, net | 497,272 | 235,544 |
Interest income | 45,991 | 212,445 |
Interest expense | (552,500) | (520,268) |
Investment income (loss) | 471,800 | (672,416) |
Total other income (expense), net | 462,563 | (744,695) |
Net Loss | (20,567,722) | (11,021,272) |
Less: Net Loss Attributable to Non-controlling Interest | 7,289,429 | 2,630,351 |
Net Loss Attributable to Granite Falls Energy, LLC | $ (13,278,293) | $ (8,390,921) |
Weighted Average Units Outstanding - Basic and Diluted (in units) | 30,606 | 30,606 |
Net Loss Per Unit - Basic and Diluted | $ (433.85) | $ (274.16) |
Distributions Per Unit (in dollars per unit) | $ 40 |
Consolidated Statements of Chan
Consolidated Statements of Changes in Members’ Equity - USD ($) | Members' Equity attributable to Granite Falls Energy, LLC | Non-controlling Interest | Total |
Balance - at Oct. 31, 2018 | $ 75,083,782 | $ 21,846,265 | $ 96,930,047 |
Changes in Members' Equity | |||
Member distribution | (1,224,226) | (1,224,226) | |
Net loss attributable to non-controlling interest | (2,630,351) | (2,630,351) | |
Net loss attributable to Granite Falls Energy, LLC | (8,390,921) | (8,390,921) | |
Balance - at Oct. 31, 2019 | 65,468,635 | 19,215,914 | 84,684,549 |
Changes in Members' Equity | |||
Acquisition of non-controlling interest | (78,817) | (2,146,183) | (2,225,000) |
Net loss attributable to non-controlling interest | (7,289,429) | (7,289,429) | |
Net loss attributable to Granite Falls Energy, LLC | (13,278,293) | (13,278,293) | |
Balance - at Oct. 31, 2020 | $ 52,111,525 | $ 9,780,302 | $ 61,891,827 |
Consolidated Statements of Cash
Consolidated Statements of Cash Flows - USD ($) | 12 Months Ended | |
Oct. 31, 2020 | Oct. 31, 2019 | |
Cash Flows from Operating Activities: | ||
Net loss | $ (20,567,722) | $ (11,021,272) |
Adjustments to reconcile net loss to net cash provided by (used in) operations: | ||
Depreciation and amortization | 9,310,775 | 9,410,659 |
Change in fair value of derivative instruments | 2,719,697 | (1,325,608) |
Loss (gain) on disposal of assets | 1,833,928 | 2,527 |
Loss (gain) on equity method investments | (471,800) | 672,416 |
Goodwill impairment | 1,372,473 | |
Changes in operating assets and liabilities: | ||
Commodity derivative instruments | (1,136,171) | 1,410,088 |
Accounts receivable | 4,041,827 | (102,692) |
Inventory | 11,220 | 1,113,784 |
Prepaid expenses and other current assets | (2,436) | (28,022) |
Accounts payable | (889,813) | 1,066,539 |
Accrued expenses | 85,088 | (607,498) |
Accrued railcar rehabilitation costs | 45,924 | 1,376,000 |
Net Cash Provided By (Used In) Operating Activities | (3,647,010) | 1,966,921 |
Cash Flows from Investing Activities: | ||
Purchase of investment | (500,000) | |
Payments for capital expenditures | (5,826,105) | (930,189) |
Net Cash Used in Investing Activities | (5,826,105) | (1,430,189) |
Cash Flows from Financing Activities: | ||
Checks drawn in excess of bank balances | 692,984 | 0 |
Proceeds from long-term debt | 66,305,585 | |
Payments on long-term debt | (56,819,216) | (414,307) |
Proceeds from Paycheck Protection Program loan | 1,299,593 | |
Acquisition of non-controlling interest | (2,000,000) | (225,000) |
Member distributions paid | (1,224,226) | |
Net Cash Provided by (Used in) Financing Activities | 9,478,946 | (1,863,533) |
Net Increase (Decrease) in Cash and Restricted Cash | 5,831 | (1,326,801) |
Cash and Restricted Cash - Beginning of Period | 13,574,290 | 14,901,091 |
Cash and Restricted Cash - End of Period | 13,580,121 | 13,574,290 |
Cash paid during the period for: | ||
Interest expense | 463,861 | 520,268 |
Supplemental Disclosure of Non-Cash Investing and Financing Activities | ||
Purchase of equipment with trade-in value | 29,000 | |
Capital expenditures and construction in process included in accounts payable | $ 2,140,625 | $ 125,186 |
Consolidated Statements of Ca_2
Consolidated Statements of Cash Flows (Parenthetical) - USD ($) | Oct. 31, 2020 | Oct. 31, 2019 | Oct. 31, 2018 |
Reconciliation of Cash and Restricted Cash | |||
Cash - Balance Sheet | $ 11,423,427 | $ 13,521,774 | |
Restricted Cash - Balance Sheet | 2,156,694 | 52,516 | |
Cash and Restricted Cash | $ 13,580,121 | $ 13,574,290 | $ 14,901,091 |
SUMMARY OF SIGNIFICANT ACCOUNTI
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | 12 Months Ended |
Oct. 31, 2020 | |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | 1. SUMMARY OF SIGNIFICAN Nature of Business Granite Falls Energy, LLC (“GFE”) is a Minnesota limited liability company currently producing fuel-grade ethanol, distillers’ grains, and crude corn oil near Granite Falls, Minnesota and sells these products, pursuant to marketing agreements, throughout the continental U.S. and on the international market. GFE’s plant has an approximate annual production capacity of 60 million gallons, but is currently permitted to produce up to 70 million gallons of undenatured ethanol on a twelve-month rolling sum basis. Additionally, GFE owns a majority interest in Heron Lake BioEnergy, LLC (“HLBE”). HLBE is a Minnesota limited liability company currently producing fuel-grade ethanol, distillers’ grains, and crude corn oil near Heron Lake, Minnesota and sells these products, pursuant to marketing agreements, throughout the continental United States. HLBE’s plant has an approximate annual production capacity of 60 million gallons, but is currently permitted to produce up to 72.3 million gallons per year of undenatured ethanol on a twelve-month rolling sum basis. Additionally, HLBE, through a wholly owned subsidiary, operates a natural gas pipeline that provides natural gas to the HLBE’s ethanol production facility and other customers. Principles of Consolidation The accompanying consolidated financial statements consolidate the operating results and financial position of GFE, and its approximately 50.7% owned subsidiary, HLBE (through GFE’s 100% ownership of Project Viking, L.L.C.). Given GFE’s control over the operations of HLBE and its majority voting interest, GFE consolidates the financial statements of HLBE with its consolidated financial statements. The remaining approximately 49.3% ownership of HLBE is included in the consolidated financial statements as a non-controlling interest. HLBE, through its wholly owned subsidiary, HLBE Pipeline Company, LLC (collectively, “the Company”). Given the Company’s control over the operations of Agrinatural and its majority voting interest, the Company consolidates the financial statements of Agrinatural with its consolidated financial statements, with the equity and earnings (loss) attributed to the remaining 27% non-controlling interest identified separately in the accompanying consolidated balance sheets and statements of operations through December 11, 2019 when the remaining non-controlling interest was acquired. All significant intercompany balances and transactions are eliminated in consolidation. All references to “we”, “us”, “our”, and the “Company” collectively refer to GFE and its wholly owned and majority owned subsidiaries. Fiscal Reporting Period The Company’s fiscal year end for reporting financial operations is October 31 for financial reporting purposes. Accounting Estimates Management uses estimates and assumptions in preparing these consolidated financial statements in accordance with generally accepted accounting principles in the United States of America. Those estimates and assumptions affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities, and the reported revenues and expenses. The Company uses estimates and assumptions in accounting for the following significant matters, among others: economic lives of property and equipment, valuation of commodity derivatives, inventory, and inventory purchase and sale commitments, evaluation of rail car rehabilitation costs, and the assumptions used in the impairment analysis of long-lived assets, which includes goodwill. Actual results may differ from previously estimated amounts, and such differences may be material to our consolidated financial statements. The Company periodically reviews estimates and assumptions, and the effects of revisions are reflected in the period in which the revision is made. Revenue Recognition Revenue is recognized upon transfer of control of promised products or services to customers in an amount that reflects the consideration we expect to receive in exchange for those products or services. Our contracts primarily consist of agreements with marketing companies and other customers as described below. Our performance obligations consist of the delivery of ethanol, distillers' grains, and corn oil to our customers. Our customers primarily consist of two distinct marketing companies as described below. The consideration we receive for these products reflects an amount that the Company expects to be entitled to in exchange for those products, based on current observable market prices at the Chicago Mercantile Exchange, generally, and adjusted for local market differentials. Our contracts have specific delivery modes, rail or truck, and dates. Revenue is recognized when the Company delivers the products to the mode of transportation specified in the contract, at the transaction price established in the contract, net of commissions, fees, and freight. We sell each of the products via different marketing channels as described below. · Ethanol. The Company sells its ethanol via a marketing agreement with Eco-Energy, Inc. Eco-Energy sells one hundred percent of the Company's ethanol production based on agreements with end users at prices agreed upon mutually among the end user, Eco-Energy and the Company. Our performance obligations consist of our obligation to deliver ethanol to our customers. Our customer contracts consist of orders received from the customer pursuant to a marketing agreement. The marketing agreement calls for control and title to pass to Eco-Energy once a rail car is released to the railroad or a truck is released from the Company's scales. Revenue is recognized then at the price in the agreement with the end user, net of commissions, freight, and fees. · Distillers grains. The Company engages another third-party marketing company, RPMG, Inc., to sell one hundred percent of the distillers grains it produces at the plant. RPMG takes title and control once a rail car is released to the railroad or a truck is released from the Company's scales. Prices are agreed upon between RPMG and the Company. Our performance obligations consist of our obligation to deliver corn oil to our customers. Our customer contracts consist of orders received from the customer pursuant to a marketing agreement. Revenue is recognized net of commissions, freight and fees. · Distillers corn oil (corn oil). The Company sells one hundred percent of its corn oil production to RPMG, Inc. The process for selling corn oil is the same as our distillers’ grains. RPMG takes title and control once a rail car is released to the railroad or a truck is released from the Company's scales. Prices are agreed upon between RPMG and the Company. Our performance obligations consist of our obligation to deliver corn oil to our customers. Our customer contracts consist of orders received from the customer pursuant to a marketing agreement. Revenue is recognized net of commissions, freight and fees. Cost of Goods Sold The primary components of cost of goods sold for the production of ethanol and related co-products are corn, energy, raw materials, overhead, depreciation, rail car rehabilitation costs, and direct labor. Operating Expenses The primary components of operating expenses are salaries and expenses for administrative employees, professional fees, board of governor expenses, loss on disposal of assets and property taxes. Cash The Company maintains its accounts at multiple financial institutions, of which one is a member of the Company. At times throughout the year, the Company’s cash balances may exceed amounts insured by the Federal Deposit Insurance Corporation. The Company does not believe it is exposed to any significant credit risk on its cash balances. Restricted Cash The Company is periodically required to maintain at its broker cash balances related to open commodity derivative instrument positions as discussed in Note 7. Accounts Receivable Credit terms are extended to customers in the normal course of business. The Company performs ongoing credit evaluations of its customers’ financial condition and, generally, requires no collateral. Accounts receivable are recorded at their estimated net realizable value. Accounts are considered past due if payment is not made on a timely basis in accordance with the Company’s credit terms. Accounts considered uncollectible are written off. The Company follows a policy of providing an allowance for doubtful accounts; however, based on historical experience, and its evaluation of the current status of receivables, the Company is of the belief that such accounts will be collectible in all material respects and thus an allowance was not necessary at October 31, 2020 or 2019. It is at least possible this estimate will change in the future. Inventory Inventory is stated at the lower of cost or net realizable value. Cost for all inventories is determined using the first in first out method. Net realizable value is the estimated selling prices in the ordinary course of business, less reasonably predictable costs of completion, disposal, and transportation. Inventory consists of raw materials, work in process, finished goods, and supplies. Corn is the primary raw material along with other raw materials. Finished goods consist of ethanol, distillers’ grains, and corn oil. Derivative Instruments From time to time, the Company enters into derivative transactions to hedge its exposures to commodity price fluctuations. The Company is required to record these derivatives in the balance sheets at fair value. In order for a derivative to qualify as a hedge, specific criteria must be met and appropriate documentation maintained. Gains and losses from derivatives that do not qualify as hedges, or are undesignated, must be recognized immediately in earnings. If the derivative does qualify as a hedge, depending on the nature of the hedge, changes in the fair value of the derivative will be either offset against the change in fair value of the hedged assets, liabilities, or firm commitments through earnings or recognized in other comprehensive income until the hedged item is recognized in earnings. Changes in the fair value of undesignated derivatives are recorded in earnings. Additionally, the Company is required to evaluate its contracts to determine whether the contracts are derivatives. Certain contracts that literally meet the definition of a derivative may be exempted as “normal purchases or normal sales”. Normal purchases and normal sales are contracts that provide for the purchase or sale of something other than a financial instrument or derivative instrument that will be delivered in quantities expected to be used or sold over a reasonable period in the normal course of business. Contracts that meet the requirements of normal purchases or normal sales are documented as normal and exempted from accounting and reporting requirements, and therefore, are not marked to market in our consolidated financial statements. In order to reduce the risks caused by market fluctuations, the Company occasionally hedges its anticipated corn, natural gas, and denaturant purchases and ethanol sales by entering into options and futures contracts. These contracts are used with the intention to fix the purchase price of anticipated requirements for corn in the Company’s ethanol production activities and the related sales price of ethanol. The fair value of these contracts is based on quoted prices in active exchange-traded or over-the-counter market conditions. Although the Company believes its commodity derivative positions are economic hedges, none have been formally designated as a hedge for accounting purposes and derivative positions are recorded on the balance sheet at their fair market value, with changes in fair value recognized in current period earnings or losses. The Company does not enter into financial instruments for trading or speculative purposes. The Company has adopted authoritative guidance related to “Derivatives and Hedging,” and has included the required enhanced quantitative and qualitative disclosure about objectives and strategies for using derivatives, quantitative disclosures about fair value amounts of gains and losses from derivative instruments, and disclosures about credit-risk-related contingent features in derivative agreements. See further discussion in Note 7. Property and Equipment Property and equipment are stated at cost. Depreciation is provided over the following estimated useful lives by use of the straight-line method. Asset Description Years Land improvements 5-20 years Railroad improvements 5-20 years Process equipment and tanks 5-40 years Administration building 10-40 years Office equipment 3-10 years Rolling stock 5-10 years Maintenance and repairs are expensed as incurred; major improvements and betterments are capitalized. Construction in progress expenditures will be depreciated using the straight-line method over their estimated useful lives once the assets are placed into service. Long-Lived Assets Long-lived assets, such as property and equipment, and purchased intangible assets subject to amortization, are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. When determining impairment losses, a long-lived asset should be grouped with other assets or liabilities at the lowest level for which identifiable cash flows are largely independent of the cash flows of other assets or liabilities. If circumstances require a long-lived asset be tested for possible impairment, the Company first compares undiscounted cash flows expected to be generated by an asset to the carrying value of the asset. If the carrying value of the long-lived asset is not recoverable on an undiscounted cash flow basis, impairment is recognized to the extent that the carrying value exceeds its fair value. Fair value is determined through various valuation techniques including, but not limited to, discounted cash flow models, quoted market values and third-party independent appraisals, as considered necessary. No impairment expense was recorded during fiscal 2020 and 2019. Investments On November 1, 2016, GFE subscribed to purchase 1,500 capital units of Ringneck Energy & Feed, LLC (“Ringneck”) at a price of $5,000 per unit for a total of $7,500,000. Ringneck is a South Dakota limited liability company that constructed an 80 million gallon per year ethanol manufacturing plant outside of Onida, South Dakota in Sully County. GFE’s investment is sufficient to secure the Company the right to appoint one director to the board of directors of Ringneck. GFE has appointed Steve Christensen, its CEO, to serve as its appointed director. GFE paid a down payment of $750,000 in connection with the subscription, and signed a promissory note for $6,750,000 for the remaining balance of the subscription. On August 2, 2017, following notice from Ringneck accepting GFE’s subscription and that payment of the balance of GFE’s subscription and promissory note was due, GFE borrowed $7.5 million under its credit facility with Project Hawkeye, LLC (“Project Hawkeye”) and paid $6,750,000 to Ringneck as payment for the remaining balance of GFE’s subscription. Project Hawkeye is an affiliate of Fagen, Inc., which is a member of GFE. On June 10, 2019, GFE subscribed to purchase an additional 100 capital units of Ringneck at a price of $5,000 per unit for a total of an additional $500,000. See Note 9 below for the terms of GFE’s credit facility with Project Hawkeye. On June 29, 2018, GFE executed a subscription agreement for investment in Harvestone Group, LLC (“Harvestone”), a Delaware limited liability company, and a Joinder to the Operating Agreement of Harvestone. In connection with the execution of the subscription agreement and joinder, GFE made a capital contribution of $2.0 million in exchange for twenty (20) preferred membership units. Harvestone is an ethanol marketing, logistics, and trading company headquartered in Franklin, Tennessee. Harvestone is owned by several other ethanol producers and other private investors, and its primary business is marketing and trading for member and non-member ethanol producers. The marketing and trading commenced in January 2019. The investments are accounted for by the equity method, under which the Company’s share of the net income of the investee is recognized as income in the Company’s Consolidated Statements of Operations and added to the investment account, and distributions received from the affiliates are treated as a reduction of the investment. Summarized financial information of Ringneck is as follows: October 31, 2020 2019 Current Assets $ 19,510,000 $ 10,407,000 Total Assets 149,434,000 146,986,000 Current Liabilities 16,206,000 7,612,000 Total Liabilities 69,439,000 67,916,000 Members' Equity 79,995,000 79,070,000 12 Months Ended October 31, 2020 2019 Revenue $ 114,768,000 $ 47,098,000 Gross Profit (Loss) 6,325,000 (3,115,000) Operating Profit (Loss) 7,758,000 (7,301,000) Net Profit (Loss) 424,000 (9,893,000) Fair Value of Financial Instruments The Company’s accounting for fair value measurements of assets and liabilities that are recognized or disclosed at fair value in the financial statements on a recurring or nonrecurring basis adhere to the Financial Accounting Standards Board (“FASB”) fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value. The Company has adopted guidance for fair value measurement related to nonfinancial items that are recognized and disclosed at fair value in the financial statements on a nonrecurring basis. The guidance establishes a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurements) and the lowest priority to measurements involving significant unobservable inputs (Level 3 measurements). The three levels of the fair value hierarchy are as follows: · Level 1 inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities that the Company has the ability to access at the measurement date. · Level 2 inputs include: 1. Quoted prices in active markets for similar assets or liabilities. 2. Quoted prices in markets that are observable for the asset or liability either directly or indirectly, for substantially the full term of the asset or liability. 3. Inputs that derived primarily from or corroborated by observable market date by correlation or other means. · Level 3 inputs are unobservable inputs for the asset or liability. The level in the fair value hierarchy within which a fair measurement in its entirety falls is based on the lowest level input that is significant to the fair value measurement in its entirety. Except for those assets and liabilities which are required by authoritative accounting guidance to be recorded at fair value, the Company has elected not to record any other assets or liabilities at fair value. No events occurred during the fiscal years ended October 31, 2020 or 2019 that required adjustment to the recognized balances of assets or liabilities, which are recorded at fair value on a nonrecurring basis. The carrying value of cash, accounts receivable, accounts payable and accrued liabilities approximates fair value due to the short maturity of these instruments. The Company obtains fair value measurements from an independent pricing service for corn derivative contracts. The fair value measurements consider observable data that may include dealer quotes and live trading levels from the Chicago Board of Trade and New York Mercantile Exchange markets. The fair value of the long-term debt is estimated based on anticipated interest rates which management believes would currently be available to the Company for similar issues of debt, taking into account the current credit risk of the Company and other market factors. The Company believes the carrying value of the debt instruments approximate fair value. Income Taxes The Company is treated as a partnership for federal and state income tax purposes, and generally does not incur income taxes. Instead its earnings and losses are included in the income tax returns of its members. Therefore, no provision or liability for federal or state income taxes has been included in these financial statements. Differences exist between financial statement basis of assets and tax basis of assets and financial statement basis of liabilities and tax basis of liabilities. In addition, the Company uses the alternative depreciation system for tax depreciation instead of the straight-line method that is used for book depreciation, which also causes temporary differences. The Company’s tax year end is December 31. The Company had no significant uncertain tax positions as of October 31, 2020 or 2019 that would require disclosure, primarily due to the partnership tax status. The Company recognizes and measures tax benefits when realization of the benefits is uncertain under a two-step approach. The first step is to determine whether the benefit meets the more-likely-than-not condition for recognition and the second step is to determine the amount to be recognized based on the cumulative probability that exceeds 50%. Primarily due to the Company’s tax status as a partnership, the adoption of this guidance had no material impact on the Company’s financial condition or results of operations. The Company files income tax returns in the U.S. federal and Minnesota state jurisdictions. For years before 2017, the Company is no longer subject to U.S. Federal or state income tax examinations. Net Income (Loss) per Unit Basic net income (loss) per unit is computed by dividing net income (loss) by the weighted average number of members’ units outstanding during the period. Diluted net income per unit is computed by dividing net income by the weighted average number of members’ units and members’ unit equivalents outstanding during the period. There were no member unit equivalents outstanding during the periods presented; accordingly, for all periods presented, the calculations of the Company’s basic and diluted net income per unit are the same. Environmental Liabilities The Company’s operations are subject to environmental laws and regulations adopted by various governmental entities in the jurisdiction in which it operates. These laws require the Company to investigate and remediate the effects of the release or disposal of materials at its location. Accordingly, the Company has adopted policies, practices, and procedures in the areas of pollution control, occupational health, and the production, handling, storage, and use of hazardous materials to prevent material environmental or other damage, and to limit the financial liability, which could result from such events. Environmental liabilities are recorded when the liability is probable and the costs can be reasonably estimated. No expense has been recorded for the fiscal years ended October 31, 2020 or 2019. Goodwill Goodwill represents the cost in excess of the fair value of net assets acquired. The Company conducts impairment assessments annually or when events indicate a triggering event has occurred. A triggering event was noted due to the prolonged ongoing uncertainty in the global markets as a result of the COVID-19 pandemic and the net loss for fiscal year 2020. As such, an impairment test was performed on the Company's goodwill as of October 31, 2020 using a discounted cash flow model. This test resulted in a full impairment loss of approximately $1,372,000 at October 31, 2020. Reportable Operating Segments Accounting Standards Codification (“ASC”) 280, “Segment Reporting,” establishes the standards for reporting information about segments in financial statements. Operating segments are defined as components of an enterprise for which separate financial information is available that is evaluated regularly by the chief operating decision maker in deciding how to allocate resources and in assessing performance. Therefore, in applying the criteria set forth in ASC 280, the Company determined that based on the nature of the products and production process and the expected financial results, the Company’s operations at GFE’s ethanol plant and HLBE’s plant, including the production and sale of ethanol and its co-products, are aggregated into one reporting segment. Additionally, the Company also realizes relatively immaterial revenue from natural gas pipeline operations at Agrinatural, HLBE’s majority owned subsidiary. Before and after accounting for intercompany eliminations, these revenues from Agrinatural’s represent less than less than 1% of our consolidated revenues and have little to no impact on the overall performance of the Company. Therefore, the Company does not separately review Agrinatural’s revenues, cost of sales or other operating performance information. Rather, the Company reviews Agrinatural’s natural gas pipeline financial data on a consolidated basis with the Company’s ethanol production operating segment. The Company believes that the presentation of separate operating performance information for Agrinatural’s natural gas pipeline operations would not provide meaningful information to a reader of the Company’s consolidated financial statements and would not achieve the basic principles and objectives of ASC 280. Recently Adopted Accounting Pronouncements In February 2016, the FASB issued new guidance on accounting for leases under Accounting Standards Codification 842 (ASC 842). Under the new guidance, lessees are required to recognize the following for all leases (with the exception of short-term leases) at the commencement date: (1) a lease liability, which is a lessee’s obligation to make lease payments arising from a lease, measured on a discounted cash flow basis; and (2) a “right of use” asset, which is an asset that represents the lessee’s right to use the specified asset for the lease term. Lease expense under the new guidance is substantially the same as prior to the adoption. See Note 11 for further information. In January 2017, FASB issued ASU No. 2017-04, Intangibles–Goodwill and Other (Topic 350): Simplifying the Test of Goodwill Impairment, which eliminates Step 2 from the goodwill impairment test (i.e., the requirement for an entity to calculate the implied fair value of goodwill in measuring a goodwill impairment loss). ASU 2017-04 provides that a company should perform its goodwill impairment test by comparing the fair value of a reporting unit with its carrying value and should recognize an impairment charge if the carrying value exceeds the fair value of the reporting unit, but only to the extent of the goodwill amount allocated to that reporting unit. Companies still have the option to perform a qualitative assessment to determine if the quantitative impairment test is necessary. We early adopted this standard as of November 1, 2019. This standard did not have a significant effect on our accounting policies or on our consolidated financial statements and related disclosures. |
RISKS AND UNCERTAINTIES
RISKS AND UNCERTAINTIES | 12 Months Ended |
Oct. 31, 2020 | |
RISKS AND UNCERTAINTIES | |
RISKS AND UNCERTAINTIES | 2. RISKS AND UNCERTAINTIES The Company has certain risks and uncertainties that it experiences during volatile market conditions. These volatilities can have a severe impact on operations. The Company’s revenues are derived primarily from the sale and distribution of ethanol, distillers’ grains and corn oil to customers primarily located in the U.S. Corn for the production process is supplied to our plants primarily from local agricultural producers and from purchases on the open market. Ethanol sales typically average 75-90% of total revenues and corn costs typically average 65-85% of cost of goods sold. The Company’s operating and financial performance is largely driven by the prices at which it sells ethanol and the net expense of corn. The price of ethanol is influenced by factors such as supply and demand, the weather, government policies and programs, unleaded gasoline prices and the petroleum markets as a whole. Excess ethanol supply in the market, in particular, puts downward pressure on the price of ethanol. The largest cost of production is corn. The cost of corn is generally impacted by factors such as supply and demand, the weather, government policies and programs, and a risk management program used to protect against the price volatility of these commodities. Market fluctuations in the price of and demand for these products may have a significant adverse effect on the Company’s operations, profitability and the availability and adequacy of cash flow to meet the Company’s working capital requirements. HLBE was out of compliance with certain debt covenants on October 31, 2020, for which a waiver was obtained from the lender. Subsequent to October 31, 2020, HLBE had further instances of noncompliance with debt covenants and has forecasted that it is probable that there will be future instances of noncompliance with debt covenants within the next twelve months. These conditions result in the classification of all HLBE debt with the lender as current as of October 31, 2020. HLBE has insufficient cash on hand and additional borrowing capacity, and current forecasts indicate insufficient cash flows from operations, to repay the debt if it were to come due as a result of covenant noncompliance. While the Company believes the replacement of the HLBE boiler has improved the operating performance of the plant, and led to lower operating costs, market conditions have resulted in losses. HLBE intends to source other capital sources, which may include re-negotiating their debt agreements and terms. At this time, there are no commitments to do so and we may not be successful in doing so. The Company, and the ethanol industry as a whole, experienced significant adverse conditions throughout most of 2019 and 2020 as a result of industry-wide record low ethanol prices due to reduced demand and high industry inventory levels. These factors resulted in prolonged negative operating margins, significantly lower cash flow from operations and substantial net losses. We expect to have sufficient cash on hand and availability on our credit facilities and other loans to fund our operations and commitments for the next twelve months from the issuance date of these consolidated financial statements. However, should unfavorable operating conditions continue in the ethanol industry that prevent us from profitably operating our plant, we may need to seek additional debt or equity funding or further idle ethanol production altogether. Additionally, supply and demand for ethanol are impacted by federal and state legislation and regulation, most significantly the Renewable Fuels Standard (“RFS”), and any changes in legislation or regulation could cause the demand for ethanol to decline or its supply to increase, which could have a material adverse effect on our business, results of operations and financial condition, and the ability to operate at a profit. In May 2020, the EPA delivered its proposed rule to the White House Office of Management and Budget (“OMB”) to set 2021 RVOs. OMB is required to review the proposed rule before releasing it for public comment. The proposed 2021 RVOs are still undergoing OMB review, and therefore, the proposed rule has neither been released for public comment or finalized. As a result, the statutory November 30 deadline was not met. The EPA Administrator has stated that the COVID-19 pandemic resulted in significant delays and that the EPA is analyzing various factors in setting 2021 RVOs in light of the pandemic. On December 19, 2019, the EPA announced the final 2020 renewable volume requirements (“RVOs”), setting the RVOs for conventional ethanol at 15.0 billion gallons, advanced biofuels at 5.09 billion gallons and cellulosic ethanol at 0.59 billion gallons, for overall RVOs of 20.09 billion gallons for 2020. Although this final rule achieves the statutory RVO for conventional corn-based ethanol originally set by Congress when the RFS was enacted, it reduces the overall RVOs below the overall statutory level of 30 billion gallons. Current ethanol production capacity exceeds the EPA’s 2019 and 2020 RVOs that can be satisfied by corn-based ethanol. According to the RFS, if mandatory renewable fuel volumes are reduced by at least 20% for two consecutive years, the EPA is required to modify, or reset, statutory volumes through 2022. In October 2018, the Office of Management and Budget announced that the 20% thresholds “have been met or are expected to be met in the near future In May 2019, the EPA delivered a proposed RFS “reset” rule to the Office of Management and Budget. The “reset” remains on the OMB agenda. If the statutory RVOs are reduced as a result of such reset, it could have an adverse effect on the market price and demand for ethanol which would negatively impact our financial performance. Additionally, opponents of ethanol such as large oil companies will likely continue their efforts to repeal or reduce the RFS through lawsuits or lobbying of Congress. Successful reduction or repeal of the blending requirements of the RFS could result in a significant decrease in ethanol demand. |
REVENUE
REVENUE | 12 Months Ended |
Oct. 31, 2020 | |
REVENUE | |
REVENUE | 3. REVENUE Revenue by Source All revenues from contracts with customers under ASC Topic 606 are recognized at a point in time. The following table disaggregates revenue by major source for the fiscal year ended October 31, 2020: Total Ethanol $ Distillers’ Grains Corn Oil Other Natural Gas Pipeline Total Revenues $ Total Ethanol $ Distillers’ Grains Corn Oil Other Natural Gas Pipeline Total Revenues $ Payment Terms The Company has contractual payment terms with each respective marketer that sells ethanol, distillers’ grains and corn oil. These terms are 10 calendar days after the transfer of control date. The Company has contractual payment terms with the natural gas customers of 20 days. Shipping and Handling Costs Shipping and handling costs related to contracts with customers for sale of goods are accounted for as a fulfillment activity and are included in cost of goods sold. Accordingly, amounts billed to customers for such costs are included as a component of revenue. |
FAIR VALUE
FAIR VALUE | 12 Months Ended |
Oct. 31, 2020 | |
FAIR VALUE | |
FAIR VALUE | 4. FAIR VALUE The Company follows accounting guidance related to fair value disclosures. For the Company, this guidance applies to certain derivative investments. The authoritative guidance also clarifies the definition of fair value for financial reporting, establishes a framework for measuring fair value and requires additional disclosures about the use of fair measurements. The following table provides information on those derivative assets and liabilities measured at fair value on a recurring basis at October 31, 2020: Fair Value Measurement Using Quoted Prices Significant Other Significant Carrying Amount in in Active Markets Observable Inputs Unobservable Inputs Financial Assets: Consolidated Balance Sheet Fair Value (Level 1) (Level 2) (Level 3) Commodity Derivative Instruments - Ethanol $ 56,050 $ 56,050 $ 56,050 $ — $ — Financial Liabilities: Commodity Derivative Instruments - Corn $ 816,478 $ 816,478 $ 816,478 $ — $ — The following table provides information on those derivative assets measured at fair value on a recurring basis at October 31, 2019: Fair Value Measurement Using Quoted Prices Significant Other Significant Carrying Amount in in Active Markets Observable Inputs Unobservable Inputs Financial Assets: Consolidated Balance Sheet Fair Value (Level 1) (Level 2) (Level 3) Commodity Derivative Instruments - Corn $ 632,773 $ 632,773 $ 632,773 $ — $ — Commodity Derivative Instruments - Ethanol $ 190,325 $ 190,325 $ 190,325 $ — $ — The Company determines the fair value of commodity derivative instruments by obtaining fair value measurements from an independent pricing service. The fair value measurements consider observable data that may include dealer quotes and live trading levels from the Chicago Board of Trade market and New York Mercantile Exchange. |
CONCENTRATIONS
CONCENTRATIONS | 12 Months Ended |
Oct. 31, 2020 | |
CONCENTRATIONS | |
CONCENTRATIONS | 5. CONCENTRATIONS Granite Falls Energy GFE sold all of the ethanol, distillers’ grains, and corn oil produced at its plant to two customers under marketing agreements during the fiscal years ended October 31, 2020 and 2019. The percentage of GFE’s total revenues attributable to each of its two major customers for the fiscal years ended October 31, 2020 and 2019 were as follows: October 31, 2020 October 31, 2019 Eco-Energy, Inc. - Ethanol RPMG, Inc. - Distillers' Grains & Corn Oil The percentage of GFE’s total accounts receivable attributable to each of its two major customers at October 31, 2020 and 2019 were as follows: October 31, 2020 October 31, 2019 Eco-Energy, Inc. - Ethanol RPMG, Inc. - Distillers' Grains & Corn Oil Heron Lake BioEnergy HLBE sold all of the ethanol, distillers’ grains, and corn oil produced at its plant to three customers under marketing agreements during the fiscal years ended October 31, 2020 and 2019. The percentage of HLBE’s total revenues attributable to each of HLBE’s three major customers for the fiscal years ended October 31, 2020 and 2019 were as follows: October 31, 2020 October 31, 2019 Eco-Energy, Inc. - Ethanol Gavilon Ingredients, LLC - Distillers' Grains RPMG, Inc. - Corn Oil The percentage of HLBE’s total accounts receivable attributable to each of HLBE’s three major customers at October 31, 2020 and 2019 were as follows: October 31, 2020 October 31, 2019 Eco-Energy, Inc. - Ethanol Gavilon Ingredients, LLC - Distillers' Grains RPMG, Inc. - Corn Oil |
INVENTORY
INVENTORY | 12 Months Ended |
Oct. 31, 2020 | |
INVENTORY | |
INVENTORY | 6. INVENTORY Inventory consists of the following at October 31: 2020 2019 Raw materials $ 4,893,502 $ 3,253,361 Supplies 3,070,458 3,330,513 Work in process 1,480,871 1,434,552 Finished goods 4,346,974 5,784,599 Totals $ 13,791,805 $ 13,803,025 The Company performs a lower of cost or net realizable value analysis on inventory to determine if the market values of certain inventories are less than their carrying value, which is attributable primarily to decreases in market prices of corn and ethanol. Based on the lower of cost or net realizable value analysis, the Company recorded a loss on ethanol inventories, as a component of cost of goods sold, of approximately $383,000 for the fiscal year ended October 31, 2020. Based on the lower of cost or net realizable value analysis, the Company recorded a loss on ethanol and corn inventories, as a component of cost of goods sold, of approximately $547,000 and $47,000, respectively, for the fiscal year ended October 31, 2019. |
DERIVATIVE INSTRUMENTS
DERIVATIVE INSTRUMENTS | 12 Months Ended |
Oct. 31, 2020 | |
DERIVATIVE INSTRUMENTS | |
DERIVATIVE INSTRUMENTS | 7. DERIVATIVE INSTRUMENTS The Company enters into corn, ethanol, and natural gas derivatives in order to protect cash flows from fluctuations caused by volatility in commodity prices for periods up to 24 months. These derivatives are put in place to protect gross profit margins from potentially adverse effects of market and price volatility on ethanol sales and corn purchase commitments where the prices are set at a future date. Although these derivative instruments serve the Company’s purpose as an economic hedge, they are not designated as effective hedges for accounting purposes. For derivative instruments that are not accounted for as hedges, or for the ineffective portions of qualifying hedges, the change in fair value is recorded through earnings in the period of change. As of October 31, 2020, the total notional amount of GFE’s outstanding corn derivative instruments was approximately 4,275,000 bushels, comprised of long corn futures positions on 760,000 bushels that were entered into to hedge forecasted ethanol sales through March 2021, and short corn futures positions on 3,515,000 bushels that were entered into to hedge forecasted corn purchases through December 2022 and are directly related to corn forward contracts. Additionally, there are corn options positions of 1,920,000 bushels through March 2021. There may be offsetting positions that are not shown on a net basis that could lower the notional amount of positions outstanding. As of October 31, 2020, GFE had approximately $1,643,000 of cash collateral (restricted cash) related to derivatives held by a broker. As of October 31, 2020, the total notional amount of HLBE’s outstanding corn derivative instruments was approximately 2,095,000 bushels, comprised of long corn futures positions on 325,000 bushels that were entered into to hedge forecasted ethanol sales through March 2021, and short corn futures positions on 1,770,000 bushels that were entered into to hedge forecasted corn purchases through July 2022 and are directly related to corn forward contracts. Additionally, there are corn options positions of 1,380,000 bushels through March 2021. There may be offsetting positions that are not shown on a net basis that could lower the notional amount of positions outstanding. As of October 31, 2020, HLBE had approximately $514,000 in cash collateral (restricted cash) related to derivatives held by a broker. The following tables provide details regarding the Company’s derivative instruments at October 31, 2020, none of which were designated as hedging instruments: Consolidated Balance Sheet Location Assets Liabilities Corn contracts - GFE Commodity derivative instruments $ — $ 642,550 Corn contracts - HLBE Commodity derivative instruments — 173,928 Ethanol contracts - GFE Commodity derivative instruments 40,900 — Ethanol contracts - HLBE Commodity derivative instruments 15,150 — Totals $ 56,050 $ 816,478 As of October 31, 2019, the total notional amount of GFE’s outstanding corn derivative instruments was approximately 7,495,000 bushels, comprised of long corn positions on 3,345,000 bushels that were entered into to hedge forecasted ethanol sales through July 2020, and short corn positions on 4,150,000 bushels that were entered into to hedge forecasted corn purchases through December 2022. Additionally, there are corn options positions of 4,000,000 bushels through March 2020. There may be offsetting positions that are not shown on a net basis that could lower the notional amount of positions outstanding. As of October 31, 2019, GFE did not have any cash collateral (restricted cash) related to derivatives held by a broker. As of October 31, 2019, the total notional amount of HLBE’s outstanding corn derivative instruments was approximately 5,398,000 bushels, comprised of long corn futures positions on 2,131,000 bushels that were entered into to hedge forecasted ethanol sales through July 2020, and short corn positions on 3,267,000 bushels that were entered into to hedge forecasted corn purchases through December 2021. Additionally, there are corn options positions of 4,000,000 bushels through March 2020. There may be offsetting positions that are not shown on a net basis that could lower the notional amount of positions outstanding. As of October 31, 2019, HLBE had approximately $52,000 in cash collateral (restricted cash) related to derivatives held by a broker. The following tables provide details regarding the Company’s derivative instruments at October 31, 2019, none of which were designated as hedging instruments: Consolidated Balance Sheet Location Assets Liabilities Corn contracts - GFE Commodity derivative instruments $ 612,713 $ — Corn contracts - HLBE Commodity derivative instruments 20,060 — Ethanol contracts - GFE Commodity derivative instruments 114,562 — Ethanol contracts - HLBE Commodity derivative instruments 75,763 — Totals $ 823,098 $ — The following tables provide details regarding the gains (losses) from Company’s derivative instruments in statements of operations, none of which are designated as hedging instruments: Consolidated Statement Fiscal Year Ended October 31, of Operations Location 2020 2019 Corn contracts Cost of Goods Sold $ (2,369,337) $ 1,105,528 Ethanol contracts Revenues (350,360) 220,080 Total gain (loss) $ (2,719,697) $ 1,325,608 |
PROPERTY AND EQUIPMENT
PROPERTY AND EQUIPMENT | 12 Months Ended |
Oct. 31, 2020 | |
PROPERTY AND EQUIPMENT | |
PROPERTY AND EQUIPMENT | 8. PROPERTY AND EQUIPMENT A summary of property and equipment is as follows: October 31, 2020 October 31, 2019 Land and improvements $ 13,926,199 $ 13,697,790 Railroad improvements 9,045,112 9,045,112 Process equipment and tanks 134,233,838 134,291,374 Administration building 569,328 569,328 Office equipment 1,083,694 1,083,694 Rolling stock 2,150,700 2,150,700 Construction in progress 4,680,716 58,319 165,689,587 160,896,317 Less: accumulated depreciation (140,849,274) (102,627,175) Net property and equipment $ 54,965,983 $ 58,269,142 Depreciation expense totaled approximately $9,311,000 and $9,403,000 for the fiscal years ended October 31, 2020 and 2019, respectively. In July 2020, HLBE experienced major issues with its boiler, which negatively impacted production. HLBE operated with temporary boilers from August 2020 through January 2021. HLBE determined that the purchase and installation of a new boiler would be more economical and efficient than attempted repairs to the failing boiler. On September 2, 2020, HLBE received notice of approval of the new boiler from the Minnesota Pollution Control Agency. As a result, HLBE abandoned the failing boiler at that time. HLBE recorded the loss on disposal as a component of operating expenses during the fourth fiscal quarter of the fiscal year ended October 31, 2020 of approximately $1.8 million. The new boiler was placed in service in January 2021 at an estimated cost of $5.2 million. |
DEBT FACILITIES
DEBT FACILITIES | 12 Months Ended |
Oct. 31, 2020 | |
DEBT FACILITIES | |
DEBT FACILITIES | 9. DEBT FACILITIES Granite Falls Energy Revolving Term Loan GFE has a credit facility with a lender. This credit facility was a seasonal revolving loan in the amount of $6,000,000 that was set to expire on October 1, 2020. On September 30, 2020, the seasonal revolving loan was converted into a revolving term loan in the amount of $11,000,000 that will expire on October 20, 2024. There was no outstanding balance on this revolving term loan on October 31, 2020. Therefore, the aggregate principal amount available for borrowing by GFE under this revolving term loan at October 31, 2020 was $11,000,000. Interest on the revolving term accrues at a variable weekly rate equal to 3.25% above the higher of 0.00% or One Month London Interbank Offered Rate (“LIBOR”) Index Rate, which totaled 3.39% at October 31, 2020. The credit facility also requires GFE to comply with certain financial covenants at various times calculated monthly, quarterly or annually, including restriction of the payment of dividends and maintenance of certain financial ratios including minimum working capital, minimum net worth and a debt service coverage ratio as defined by the credit facility. During the second fiscal quarter of 2020, the credit facility was amended to reduce the working capital covenant to $9 million, from the original $10 million working capital covenant, during the period from March 31, 2020 through September 30, 2020, and increasing to $10 million beginning October 1, 2020. Additionally, the current portion of leases will be excluded from the calculation of current liabilities. Failure to comply with the protective loan covenants or maintain the required financial ratios may cause acceleration of the outstanding principal balances on the revolving term loan and/or the imposition of fees, charges or penalties. For the fiscal year ended October 31, 2019, GFE had an event of non-compliance with the debt service coverage ratio as defined in the credit facility. In December 2019, GFE received a waiver from its lender waiving this event of non-compliance. In May 2020, GFE had an event of non-compliance related to the minimum working capital requirement as defined in the credit facility. The Company obtained a waiver from its lenders for this event of non-compliance. For the period ended October 31, 2020, GFE had an event of non-compliance with respect to our debt service coverage ratio. GFE has obtained a waiver from its lender for the non-compliance event. GFE also agreed to pay an unused commitment fee on the unused available portion of the revolving term loan commitment at the rate of 0.500% per annum, payable monthly in arrears. The credit facility is secured by substantially all assets of GFE. There are no savings account balance collateral requirements as part of this credit facility. Project Hawkeye Loan On August 2, 2017, GFE entered into a replacement credit facility with Project Hawkeye. The terms of the replacement credit facility allow GFE to borrow up to $7.5 million of variable-rate, amortizing non-recourse debt from Project Hawkeye using the Ringneck investment as collateral. The Project Hawkeye loan bears interest from date funds are first advanced on the loan through maturity, at a rate per annum equal to the sum of the One Month LIBOR Index Rate plus 3.05% per annum, with an interest rate floor of 3.55% which equated to 3.55% and 4.82% at October 31, 2020 and 2019, respectively. The Project Hawkeye loan requires annual interest payments only for the first two years of the loan and monthly principal and interest payments for years three through nine based on a seven-year amortization period. The monthly amortized payments will be re-amortized following any change in interest rate. The entire outstanding principal balance of the loan, plus any accrued and unpaid interest thereon, is due and payable in full on August 2, 2026. GFE is permitted to voluntarily prepay all or any portion of the outstanding balance of this loan at any time without premium or penalty. Pursuant to a pledge agreement entered into in connection with the Project Hawkeye loan, GFE’s obligations are secured by all of its right, title, and interest in its investment in Ringneck, including the 1,500 units subscribed for by GFE. The loan is non-recourse to all of GFE’s other assets, meaning that in the event of default, the only remedy available to Project Hawkeye will be to foreclose and seize all of GFE’s right, title and interest in its investment in Ringneck. SBA Paycheck Protection Program Loan In March 2020, Congress passed the Paycheck Protection Program, authorizing loans to small businesses for use in paying employees that they continue to employ throughout the COVID-19 pandemic and for rent, utilities and interest on mortgages. Loans obtained through the Paycheck Protection Program are eligible to be forgiven as long as the proceeds are used for qualifying purposes and certain other conditions are met. On April 17, 2020, GFE received a loan in the amount of $703,900 through the Paycheck Protection Program. Management expects that the entire loan will be used for payroll, utilities and interest; therefore, management anticipates that the loan will be substantially forgiven. To the extent it is not forgiven, GFE would be required to repay that portion at an interest rate of 1% over a period of two years, beginning August 2021 with a final installment in April 2022. Heron Lake BioEnergy Revolving Term Note The 2020 Credit Facility includes an amended and restated revolving term loan with an $8,000,000 principal commitment, which was increased to a $13,000,000 principal commitment in June 2020. This loan replaces the amended revolving term note and seasonal revolving loan made under the 2018 Credit Facility. The loan is secured by substantially all of HLBE’s assets, including a subsidiary guarantee. The 2020 Credit Facility contains customary covenants, including restrictions on the payment of dividends and loans and advances to Agrinatural, and maintenance of certain financial ratios including minimum working capital, minimum net worth and a debt service coverage ratio as defined by the credit facility. During the second fiscal quarter of 2020, the 2020 Credit Facility was amended to reduce the working capital covenant to $8 million, from the original $10 million working capital covenant, for the period of April 30, 2020 through December 31, 2020, and increasing to $10 million beginning January 1, 2021. Additionally, the amendment excludes the current portion of leases from the calculation of current liabilities. Failure to comply with the protective loan covenants or maintain the required financial ratios may cause acceleration of the outstanding principal balances on the revolving term loan and/or the imposition of fees, charges, or penalties. In May 2020, HLBE had an event of non-compliance related to the minimum working capital requirement as defined in the 2020 Credit Facility. HLBE obtained a waiver from its lender for this event of non-compliance. For the fiscal year ended October 31, 2020, HLBE had events of non-compliance related to the working capital covenant and debt service coverage ratio. HLBE obtained a waiver from its lender for the non-compliance events. Subsequent to October 31, 2020, HLBE had further events of non-compliance and has forecasted that it is probable that there will be future instances of non-compliance with debt covenants within the next twelve months. As a result, approximately $10,300,000 of long term debt has been reclassified as current maturities. As part of the 2020 Credit Facility closing, HLBE entered into an amended administrative agency agreement with CoBank, ACP (“CoBank”). As a result, CoBank will continue to act as the agent for the lender with respect to the 2020 Credit Facility. HLBE agreed to pay CoBank an annual fee of $2,500 for its services as administrative agent. Under the terms of the amended revolving term loan, HLBE may borrow, repay, and reborrow up to the aggregate principal commitment amount of $13,000,000. Final payment of amounts borrowed under the amended revolving term loan is due December 1, 2022. Interest on the amended revolving term loan accrues at a variable weekly rate equal to 3.35% above the higher of 0.00% or the One-Month London Interbank Offered Rate (“LIBOR”) Index rate, which totaled 3.51% at October 31, 2020. HLBE also agreed to pay an unused commitment fee on the unused available portion of the amended revolving term loan commitment at the rate of 0.500% per annum, payable monthly in arrears. Single Advance Term Note In June 2020, HLBE entered into a single advance term note with a $3,000,000 principal commitment, with the purpose to finance the construction of a new grain bin and provide principal reduction on the Revolving Term Note. The interest rate is fixed at 3.80%. Principal with interest is to be paid in 10 consecutive, semi-annual installments, with the first installment due on December 20, 2020 and the last installment due on June 20, 2025. The note is secured as provided in the 2020 Credit Facility. Short Term Revolving Promissory Note In February 2021, HLBE entered into a revolving promissory note with its lender in order to finance the operating needs of HLBE. Under the terms, HLBE may borrow, repay and reborrow up to the aggregate principal commitment amount of $5,000,000. Final payment of amounts borrowed under the revolving promissory note is June 1, 2021. Interest of the loan accrues at a variable weekly rate equal to 3.35% above the higher of 0.00% or the One-Month London Interbank Offered Rate (“LIBOR”) Index rate and is payable monthly in arrears. In addition, HLBE agreed to pay an unused commitment fee on the unused available portion of the loan at the rate of 0.50% per annum payable monthly in arrears. The revolving promissory note is subject to the 2020 Credit Facility. SBA Paycheck Protection Program Loan In March 2020, Congress passed the Paycheck Protection Program, authorizing loans to small businesses for use in paying employees that they continue to employ throughout the COVID-19 pandemic and for rent, utilities and interest on mortgages. Loans obtained through the Paycheck Protection Program are eligible to be forgiven as long as the proceeds are used for qualifying purposes and certain other conditions are met. On April 18, 2020, HLBE received a loan in the amount of $595,693 through the Paycheck Protection Program. Management expects that the entire loan will be used for payroll, utilities and interest; therefore, management anticipates that the loan will be substantially forgiven. To the extent it is not forgiven, HLBE would be required to repay that portion at an interest rate of 1% over a period of two years, with principal repayment installments in May 2021 with a final installment in May 2022. Long-term debt consists of the following: October 31, 2020 October 31, 2019 GRANITE FALLS ENERGY: Revolving term loan, see terms above. $ — $ — Seasonal revolving loan, see terms above. $ — $ — Term note payable to Project Hawkeye, see terms above. 6,339,286 7,410,714 SBA Paycheck Protection Program Loan 703,900 — HERON LAKE BIOENERGY: Amended revolving term note payable to lending institution, see terms above. 7,891,426 — Single advance term note payable to lending institution, see terms above. 3,000,000 — Assessment payable as part of water treatment agreement, due in semi-annual installments of $189,393 with interest at 6.55%, enforceable by statutory lien, with the final payment due in October 2021. HLBE made deposits for one years' worth of debt service payments of approximately $364,000, which is included with other assets that are held on deposit to be applied with the final payments of the assessment. 300,551 634,180 SBA Paycheck Protection Program Loan 595,693 — Totals 18,830,856 8,044,894 Less: amounts due within one year 12,954,538 1,405,406 Net long-term debt $ 5,876,318 $ 6,639,488 Based on the most recent debt agreements, estimated maturities of long-term debt at October 31, 2020 are as follows: 2021 $ 12,954,538 2022 1,679,890 2023 1,071,429 2024 1,071,429 2025 1,071,429 Thereafter 982,141 Total debt $ 18,830,856 |
MEMBERS' EQUITY
MEMBERS' EQUITY | 12 Months Ended |
Oct. 31, 2020 | |
MEMBERS' EQUITY | |
MEMBERS' EQUITY | 10. MEMBERS’ EQUITY Granite Falls Energy GFE has one class of membership units. The units have no par value and have identical rights, obligations and privileges. Income and losses are allocated to all members based upon their respective percentage of units held. As of October 31, 2020 and 2019, GFE had 30,606 membership units authorized, issued, and outstanding, respectively. In December 2018, GFE’s Board of Governors declared a cash distribution of $40 per unit or approximately $1,224,000 for GFE unit holders of record as of December 20, 2018 and was paid by GFE in January 2019. |
LEASES
LEASES | 12 Months Ended |
Oct. 31, 2020 | |
LEASES | |
LEASES | 11. LEASES As discussed in Note 1, on November 1, 2019, the Company adopted the provisions of ASC 842 using the modified retrospective approach, which applies the provisions of ASC 842 upon adoption, with no change to prior periods. This adoption resulted in the Company recognizing initial right of use assets and lease liabilities of approximately $23.6 million at November 1, 2019. The adoption did not have a significant impact on the Company’s statement of operations. Upon the initial adoption of ASC 842, the Company elected the following practical expedients allowable under the guidance: not to reassess whether any expired or existing contracts are or contain leases; not to reassess the lease classification for any expired or existing leases; not to reassess initial direct costs for any existing leases. Additionally, the Company elected the short-term lease exemption policy, applying the requirements of ASC 842 to only long-term (greater than one year) leases. The Company leases rail cars for its facility to transport ethanol and dried distillers’ grains to its end customers. Operating lease right of use assets and liabilities are recognized at commencement date based on the present value of lease payments over the lease term. The Company uses its estimated incremental borrowing rate, unless an implicit rate is readily determinable, as the discount rate for each lease in determining the present value of lease payments. For the twelve months ended October 31, 2020, the Company’s weighted average discount rate was 4.87%. Operating lease expense is recognized on a straight-line basis over the lease term. The Company determines if an arrangement is a lease or contains a lease at inception. The Company’s leases have remaining terms of approximately one to seven years. For the twelve months ended October 31, 2020, the weighted average remaining lease term was four years. The Company elected to use a portfolio approach for lease classification, which allows for an entity to group together leases with similar characteristics provided that its application does not create a material difference when compared to accounting for the leases at a contract level. For railcar leases, the Company elected to combine the railcars within each rider and account for each rider as an individual lease. The following table summarizes the remaining annual maturities of the Company’s operating lease liabilities as of October 31, 2020: 2021 $ 4,459,300 2022 4,315,800 2023 4,056,600 2024 3,442,200 2025 3,034,200 Thereafter 2,677,450 Totals 21,985,550 Less: Amount representing interest 2,601,896 Lease liabilities $ 19,383,654 HLBE recorded operating lease costs of approximately $2,331,000 and $2,374,000 in cost of goods sold in the Company’s consolidated statement of operations, which approximates the cash paid for the fiscal years ending October 31, 2020 and 2019, respectively. GFE recorded operating lease costs of approximately $3,181,000 and $3,121,000 in cost of goods sold in the Company’s consolidated statement of operations, which approximates the cash paid for the fiscal years ending October 31, 2020 and 2019, respectively. |
EMPLOYEE BENEFIT PLANS
EMPLOYEE BENEFIT PLANS | 12 Months Ended |
Oct. 31, 2020 | |
EMPLOYEE BENEFIT PLANS | |
EMPLOYEE BENEFIT PLANS | 12. EMPLOYEE BENEFIT PLANS GFE has a defined contribution plan available to all of its qualified employees. GFE contributes a match of 50% of the participant’s salary deferral up to a maximum of 3% of the employee’s salary. GFE contributions totaled approximately $76,000 and $67,000 for the fiscal years ended October 31, 2020 and 2019, respectively. HLBE has a defined contribution plan available to all of its qualified employees. HLBE contributes a match of 50% of the participant’s salary deferral up to a maximum of 4% of the employee’s salary. HLBE contributions totaled approximately $89,000 and $92,000 for the fiscal years ended October 31, 2020 and 2019, respectively. |
INCOME TAXES
INCOME TAXES | 12 Months Ended |
Oct. 31, 2020 | |
INCOME TAXES | |
INCOME TAXES | 13. INCOME TAXES The differences between the consolidated financial statement basis and tax basis of assets are estimated as follows: October 31, 2020 October 31, 2019 Financial Statement basis of assets * $ 116,197,703 $ 106,054,709 Organization & start-up costs capitalized for tax purposes, net 12,415 89,389 Tax depreciation greater than book depreciation (6,156,300) (9,349,983) Unrealized derivatives gains (losses) of commodity derivative instruments (40,900) (727,275) Capitalized inventory 35,777 52,927 Operating lease right of use assets (10,092,405) — Net effect of consolidation of acquired subsidiary (37,161,919) (28,135,408) Income tax basis of assets $ 62,794,371 $ 67,984,359 *The Financial Statement basis of assets is the total assets of GFE and HLBE. See consolidated balance sheet in financial statements. Financial Statement basis of liabilities $ 54,305,876 $ 21,370,160 Accrued rail car maintenance (825,000) (825,000) Other accruals (122,041) (84,383) Operating lease liability (10,092,405) — Net effect of consolidation of acquired subsidiary (10,065,001) (734,890) Income tax basis of liabilities $ 33,201,429 $ 19,725,887 |
RELATED PARTY TRANSACTIONS
RELATED PARTY TRANSACTIONS | 12 Months Ended |
Oct. 31, 2020 | |
RELATED PARTY TRANSACTIONS | |
RELATED PARTY TRANSACTIONS | 14. RELATED PARTY TRANSACTIONS GFE Corn Purchases - Members GFE purchased corn from members of its Board of Governors of approximately $3,099,000 for the fiscal year ended October 31, 2020, of which $353,000 is included in the accounts payable at October 31, 2020 and $4,896,000 for the fiscal year ended October 31, 2019, of which approximately $75,000 is included in accounts payable at October 31, 2019. HLBE Corn Purchases - Members HLBE purchased corn from members of its Board of Governors of approximately $12,545,000 in fiscal year 2020, of which approximately $171,000 is included in accounts payable at October 31, 2020 and $11,478,000 in fiscal year 2019, of which approximately $470,000 is included in accounts payable at October 31, 2019. |
COMMITMENTS AND CONTINGENCIES
COMMITMENTS AND CONTINGENCIES | 12 Months Ended |
Oct. 31, 2020 | |
COMMITMENTS AND CONTINGENCIES | |
COMMITMENTS AND CONTINGENCIES | 15. COMMITMENTS AND CONTINGENCIES Corn Purchase Commitments At October 31, 2020, GFE had cash and basis contracts for forward corn purchase commitments for approximately 3,995,000 bushels for deliveries through December 2022. At October 31, 2020, HLBE had cash and basis contracts for forward corn purchase commitments for approximately 2,462,000 bushels for deliveries through July 2022. Given the uncertainty of future ethanol and corn prices, the Company could incur a loss on the outstanding corn purchase contracts in future periods. Management has evaluated these forward contracts using the lower of cost or net realizable value evaluation, similar to the method used on its inventory, and has determined that an impairment loss existed at HLBE of approximately $47,000 at October 31, 2020, and no impairment losses existed at GFE at October 31, 2020 or 2019, or HLBE at October 31, 2019. The impairment expense is recorded as a component of costs of goods sold. Ethanol Marketing Agreement GFE currently has an ethanol marketing agreement with Eco-Energy, Inc., an unrelated party (“Eco-Energy”). Pursuant to this marketing agreement, Eco-Energy purchases the entire ethanol output of GFE’s ethanol plant and arranges for the transportation of ethanol; however, GFE is responsible for securing all of the rail cars necessary for the transport of ethanol by rail except for 43 rail cars leased to GFE by Eco-Energy under the marketing agreement. GFE pays Eco-Energy a marketing fee per gallon of ethanol sold in consideration of Eco-Energy’s services, as well as a fixed lease fee for rail cars leased from Eco-Energy to GFE. During the third quarter of 2016, GFE amended its marketing agreement. As of October 31, 2020, the term of the ethanol marketing agreement expired on December 31, 2020, with automatic renewals for additional consecutive terms of one year unless terminated by either party by providing written notice to the other party at least 90 days prior to the end of the then current term. Additionally, the amendment provides for certain negotiated changes to the marketing fees payable to Eco-Energy by GFE and payment terms based on prevailing market-rate conditions for comparable ethanol marketed services. The changes to the marketing fee and timing of payments by Eco-Energy were negotiated based on prevailing market-rate conditions for comparable ethanol marketing services. HLBE has an ethanol marketing agreement with Eco-Energy, an unrelated party, for the sale of ethanol (“Eco Agreement”). Under this marketing agreement, Eco-Energy purchases, markets and resells 100% of the ethanol produced at HLBE’s ethanol production facility and arranges for the transportation of ethanol. HLBE pays Eco-Energy a marketing fee per gallon of ethanol sold in consideration of Eco-Energy’s services, as well as a fixed lease fee for rail cars leased from Eco-Energy to HLBE. The marketing fee was negotiated based on prevailing market-rate conditions for comparable ethanol marketing services. The initial term of the Eco Agreement continued through December 31, 2016, with automatic renewals for additional three terms of three-year periods unless terminated by either party by providing written notice to the other party at least three months prior to the end of the then current term. During the third fiscal quarter of 2016, HLBE amended the Eco Agreement. As of October 31, 2020, the term of the Eco Agreement expired on December 31, 2020, with automatic renewals for additional consecutive terms of one year unless either party provides written notice to the other at least 90 days prior to the end of the then-current term. Additionally, the amended Eco Agreement provides for certain negotiated changes to the marketing fees payable to Eco-Energy and payment terms based on prevailing market-rate conditions for comparable ethanol marketing services. Total ethanol marketing fees and commissions of GFE and HLBE approximated $589,000 and $1,183,000 for the fiscal years ended October 31, 2020 and 2019, respectively, and are included net within revenues. Ethanol Contracts At October 31, 2020, GFE had fixed and basis contracts to sell approximately $11,780,000 of ethanol for various delivery periods through December 2020, which approximates 84% of its anticipated ethanol sales for this that period. At October 31, 2020, HLBE had fixed and basis contracts to sell approximately $12,350,000 of ethanol for various delivery periods through December 2020, which approximates 88% of its anticipated ethanol sales for this that period. Distillers Grain Marketing Agreement GFE has a distillers’ grains marketing agreement with RPMG, Inc. (“RPMG”), an unrelated party, for the purpose of marketing and selling all distillers’ grains produced by GFE. The contract commenced on February 1, 2011 with an initial term of one year, and will continue to remain in effect until terminated by either party at its unqualified option, by providing written notice of not less than 90 days to the other party. Distillers’ grains commissions to RPMG totaled approximately $255,000 and $287,000 for the fiscal years ended October 31, 2020 and 2019, respectively, and are included net within revenues. At October 31, 2020, GFE had forward contracts to sell approximately $5,948,000 of distillers’ grain for deliveries through March 2021, which approximates 50% of its anticipated distillers’ grain sales during that period. HLBE has a distillers’ grains off-take agreement with Gavilon Ingredients, LLC (“Gavilon”), an unrelated party. Under this agreement, Gavilon purchases all of the distillers’ grains produced at HLBE’s ethanol plant in exchange for a service fee. The contract commenced on November 1, 2013 with an initial term of six months, and will continue to remain in effect until terminated by either party at its unqualified option, by providing written notice of not less than 60 days to the other party. Distillers’ grains commissions totaled approximately $187,000 and $287,000 for the fiscal years ended October 31, 2020 and 2019, respectively. At October 31, 2020, HLBE had forward contracts to sell approximately $5,356,000 of distillers’ grains for delivery through March 2021, which approximates 45% of its anticipated distillers’ grains sales during that period. Corn Oil Marketing Agreement GFE has a corn oil marketing agreement with RPMG, an unrelated party, for the purpose of marketing and selling all corn oil produced by GFE. The contract commenced on April 29, 2010 with an initial term of one year, and will continue to remain in effect until terminated by either party at its unqualified option, by providing written notice of not less than 90 days to the other party. HLBE has a corn oil marketing agreement with RPMG, an unrelated party, for the purpose of marketing and selling all corn oil produced by HLBE. The contract commenced on November 1, 2013 with an initial term of one year, and will continue to remain in effect until terminated by either party at its unqualified option, by providing written notice of not less than 90 days to the other party. Corn oil commissions of GFE and HLBE totaled approximately $138,000 and $154,000 for the fiscal years ended October 31, 2020 and 2019, respectively, and are included net within revenues. At October 31, 2020, GFE had forward contracts to sell approximately $681,000 of corn oil for delivery through December 2020, which approximates 45% of its anticipated corn oil sales for that period. At October 31, 2020, HLBE had forward contracts to sell approximately $633,000 of corn oil for delivery through December 2020, which approximates 80% of its anticipated corn oil sales for that period. Contract for Natural Gas Pipeline to Plant GFE has an agreement with an unrelated company for the construction of and maintenance of 9.5 miles of natural gas pipeline that serves the GFE plant. The agreement requires the Company to receive a minimum of 1,400,000 DT of natural gas annually through the term of the agreement. The Company is charged a fee based on the amount of natural gas delivered through the pipeline. HLBE has a facilities agreement with Northern Border Pipeline Company which allows us access to an existing interstate natural gas pipeline located approximately 16 miles north from the HLBE plant. Agrinatural was formed to own and operate the pipeline and transports gas to HLBE pursuant to a transportation agreement. HLBE also has a base agreement for the sale and purchase of natural gas with Constellation NewEnergy-Gas Division, LLC (“Constellation”). This agreement runs until March 31, 2022. Letter of Credit Promissory Note In September 2019, GFE entered into a letter of credit promissory note with AgCountry Farm Credit Services, PCA to allow GFE to open irrevocable letters of credit to secure payments for its natural gas obligations. Under the terms of the note, the Company may borrow, repay, and reborrow up to the aggregate principal commitment of $500,000 until its maturing on December 1, 2022. Amounts borrowed under the note bear interest at a variable weekly rate equal to 3.00% above the rate quoted by LIBOR Index rate, which was 3.14% at October 31, 2020. The aggregate principal amount available under the letter of credit promissory note was $500,000 at October 31, 2020 and 2019. Water Agreements In September 2019, HLBE entered into an industrial water supply development and distribution agreement, effective as of February 1, 2019, with the City of Heron Lake for 10 years. HLBE has the exclusive rights to the first 600 gallons per minute of capacity that is available from the well. In consideration, HLBE will pay flow charges at a rate of $0.60 cents per thousand gallons of water, in addition to a fixed monthly charge of $1,500 per month. The flow charges are placed into a dedicated fund for operation and maintenance of the well, and are capped at $300,000 at the end of each year. HLBE is also responsible for paying 55% of operation and maintenance costs in excess of the $300,000 cap, in the first two years of the agreement. Thereafter, the percentage payable by HLBE is determined based on a two-year average of HLBE’s usage compared to the total amount of industrial water supplied to HLBE and a third-party customer of the City of Heron Lake. Under the previous industrial water supply development and distribution agreement with the City of Heron Lake, HLBE paid one half of the City of Heron Lake’s water well bond payments of $735,000, plus a 5% administrative fee, totaling approximately $594,000, and operating costs, relative to HLBE’s water usage, plus a 10% profit. HLBE recorded an assessment of approximately $367,000 with long-term debt as described in Note 9. HLBE paid operating and administrative expenses of approximately $12,000 per year. In May 2006, HLBE entered into a water treatment agreement with the City of Heron Lake and Jackson County for 30 years. HLBE will pay for operating and maintenance costs of the plant in exchange for receiving treated water. In addition, HLBE agreed to an assessment for a portion of the capital costs of the water treatment plant. HLBE recorded assessments with long-term debt of $500,000 and $3,550,000 in fiscal 2007 and 2006, respectively, as described in Note 9. HLBE paid operating and maintenance expenses of approximately $77,000 and $52,000 in fiscal 2020 and 2019, respectively. Rail Car Rehabilitation Costs GFE leases 75 hopper rail cars under a multi-year agreement, which ends November 2025. HLBE leases 50 hopper rail cars under a multi-year agreement which ends in May 2027. Under the agreements, the Company is required to pay to rehabilitate each car for "damage" that is considered to be other than normal wear and tear upon turn in of the car(s) at the termination of the lease. Prior to the year ending October 31, 2019, the Company believed ongoing repairs results in an insignificant future rehabilitation expense. During the year ending October 31, 2019, based on new information, we re-evaluated our assumptions and believe that it is probable that we may be assessed for damages incurred. During the fiscal years ended October 31, 2020 and 2019, GFE has recorded a corresponding estimated long-term liability totaling $825,000. During the fiscal years ended October 31, 2020 and 2019, HLBE has recorded a corresponding estimated long-term liability totaling approximately $597,000 and $551,000, respectively. The Company accrues the estimated cost of rail car damages over the term of the leases as the damages are incurred as a component of cost of goods sold. |
LEGAL PROCEEDINGS
LEGAL PROCEEDINGS | 12 Months Ended |
Oct. 31, 2020 | |
LEGAL PROCEEDINGS | |
LEGAL PROCEEDINGS | 16. LEGAL PROCEEDINGS From time to time in the ordinary course of business, the Company may be named as a defendant in legal proceedings related to various issues, including without limitation, workers’ compensation claims, tort claims, or contractual disputes. We are not currently a party to any material pending legal proceedings and we are not currently aware of any such proceedings contemplated by governmental authorities. |
SUMMARY OF SIGNIFICANT ACCOUN_2
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies) | 12 Months Ended |
Oct. 31, 2020 | |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | |
Nature of Business | Nature of Business Granite Falls Energy, LLC (“GFE”) is a Minnesota limited liability company currently producing fuel-grade ethanol, distillers’ grains, and crude corn oil near Granite Falls, Minnesota and sells these products, pursuant to marketing agreements, throughout the continental U.S. and on the international market. GFE’s plant has an approximate annual production capacity of 60 million gallons, but is currently permitted to produce up to 70 million gallons of undenatured ethanol on a twelve-month rolling sum basis. Additionally, GFE owns a majority interest in Heron Lake BioEnergy, LLC (“HLBE”). HLBE is a Minnesota limited liability company currently producing fuel-grade ethanol, distillers’ grains, and crude corn oil near Heron Lake, Minnesota and sells these products, pursuant to marketing agreements, throughout the continental United States. HLBE’s plant has an approximate annual production capacity of 60 million gallons, but is currently permitted to produce up to 72.3 million gallons per year of undenatured ethanol on a twelve-month rolling sum basis. Additionally, HLBE, through a wholly owned subsidiary, operates a natural gas pipeline that provides natural gas to the HLBE’s ethanol production facility and other customers. |
Principles of Consolidation | Principles of Consolidation The accompanying consolidated financial statements consolidate the operating results and financial position of GFE, and its approximately 50.7% owned subsidiary, HLBE (through GFE’s 100% ownership of Project Viking, L.L.C.). Given GFE’s control over the operations of HLBE and its majority voting interest, GFE consolidates the financial statements of HLBE with its consolidated financial statements. The remaining approximately 49.3% ownership of HLBE is included in the consolidated financial statements as a non-controlling interest. HLBE, through its wholly owned subsidiary, HLBE Pipeline Company, LLC (collectively, “the Company”). Given the Company’s control over the operations of Agrinatural and its majority voting interest, the Company consolidates the financial statements of Agrinatural with its consolidated financial statements, with the equity and earnings (loss) attributed to the remaining 27% non-controlling interest identified separately in the accompanying consolidated balance sheets and statements of operations through December 11, 2019 when the remaining non-controlling interest was acquired. All significant intercompany balances and transactions are eliminated in consolidation. All references to “we”, “us”, “our”, and the “Company” collectively refer to GFE and its wholly owned and majority owned subsidiaries. |
Fiscal Reporting Period | Fiscal Reporting Period The Company’s fiscal year end for reporting financial operations is October 31 for financial reporting purposes. |
Accounting Estimates | Accounting Estimates Management uses estimates and assumptions in preparing these consolidated financial statements in accordance with generally accepted accounting principles in the United States of America. Those estimates and assumptions affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities, and the reported revenues and expenses. The Company uses estimates and assumptions in accounting for the following significant matters, among others: economic lives of property and equipment, valuation of commodity derivatives, inventory, and inventory purchase and sale commitments, evaluation of rail car rehabilitation costs, and the assumptions used in the impairment analysis of long-lived assets, which includes goodwill. Actual results may differ from previously estimated amounts, and such differences may be material to our consolidated financial statements. The Company periodically reviews estimates and assumptions, and the effects of revisions are reflected in the period in which the revision is made. |
Revenue Recognition | Revenue Recognition Revenue is recognized upon transfer of control of promised products or services to customers in an amount that reflects the consideration we expect to receive in exchange for those products or services. Our contracts primarily consist of agreements with marketing companies and other customers as described below. Our performance obligations consist of the delivery of ethanol, distillers' grains, and corn oil to our customers. Our customers primarily consist of two distinct marketing companies as described below. The consideration we receive for these products reflects an amount that the Company expects to be entitled to in exchange for those products, based on current observable market prices at the Chicago Mercantile Exchange, generally, and adjusted for local market differentials. Our contracts have specific delivery modes, rail or truck, and dates. Revenue is recognized when the Company delivers the products to the mode of transportation specified in the contract, at the transaction price established in the contract, net of commissions, fees, and freight. We sell each of the products via different marketing channels as described below. · Ethanol. The Company sells its ethanol via a marketing agreement with Eco-Energy, Inc. Eco-Energy sells one hundred percent of the Company's ethanol production based on agreements with end users at prices agreed upon mutually among the end user, Eco-Energy and the Company. Our performance obligations consist of our obligation to deliver ethanol to our customers. Our customer contracts consist of orders received from the customer pursuant to a marketing agreement. The marketing agreement calls for control and title to pass to Eco-Energy once a rail car is released to the railroad or a truck is released from the Company's scales. Revenue is recognized then at the price in the agreement with the end user, net of commissions, freight, and fees. · Distillers grains. The Company engages another third-party marketing company, RPMG, Inc., to sell one hundred percent of the distillers grains it produces at the plant. RPMG takes title and control once a rail car is released to the railroad or a truck is released from the Company's scales. Prices are agreed upon between RPMG and the Company. Our performance obligations consist of our obligation to deliver corn oil to our customers. Our customer contracts consist of orders received from the customer pursuant to a marketing agreement. Revenue is recognized net of commissions, freight and fees. Distillers corn oil (corn oil). The Company sells one hundred percent of its corn oil production to RPMG, Inc. The process for selling corn oil is the same as our distillers’ grains. RPMG takes title and control once a rail car is released to the railroad or a truck is released from the Company's scales. Prices are agreed upon between RPMG and the Company. Our performance obligations consist of our obligation to deliver corn oil to our customers. Our customer contracts consist of orders received from the customer pursuant to a marketing agreement. Revenue is recognized net of commissions, freight and fees. |
Cost of Goods Sold | Cost of Goods Sold The primary components of cost of goods sold for the production of ethanol and related co-products are corn, energy, raw materials, overhead, depreciation, rail car rehabilitation costs, and direct labor. |
Operating Expenses | Operating Expenses The primary components of operating expenses are salaries and expenses for administrative employees, professional fees, board of governor expenses, loss on disposal of assets and property taxes. |
Cash | Cash The Company maintains its accounts at multiple financial institutions, of which one is a member of the Company. At times throughout the year, the Company’s cash balances may exceed amounts insured by the Federal Deposit Insurance Corporation. The Company does not believe it is exposed to any significant credit risk on its cash balances. |
Restricted Cash | Restricted Cash The Company is periodically required to maintain at its broker cash balances related to open commodity derivative instrument positions as discussed in Note 7. |
Account Receivable | Accounts Receivable Credit terms are extended to customers in the normal course of business. The Company performs ongoing credit evaluations of its customers’ financial condition and, generally, requires no collateral. Accounts receivable are recorded at their estimated net realizable value. Accounts are considered past due if payment is not made on a timely basis in accordance with the Company’s credit terms. Accounts considered uncollectible are written off. The Company follows a policy of providing an allowance for doubtful accounts; however, based on historical experience, and its evaluation of the current status of receivables, the Company is of the belief that such accounts will be collectible in all material respects and thus an allowance was not necessary at October 31, 2020 or 2019. It is at least possible this estimate will change in the future. |
Inventory | Inventory Inventory is stated at the lower of cost or net realizable value. Cost for all inventories is determined using the first in first out method. Net realizable value is the estimated selling prices in the ordinary course of business, less reasonably predictable costs of completion, disposal, and transportation. Inventory consists of raw materials, work in process, finished goods, and supplies. Corn is the primary raw material along with other raw materials. Finished goods consist of ethanol, distillers’ grains, and corn oil. |
Derivative Instruments | Derivative Instruments From time to time, the Company enters into derivative transactions to hedge its exposures to commodity price fluctuations. The Company is required to record these derivatives in the balance sheets at fair value. In order for a derivative to qualify as a hedge, specific criteria must be met and appropriate documentation maintained. Gains and losses from derivatives that do not qualify as hedges, or are undesignated, must be recognized immediately in earnings. If the derivative does qualify as a hedge, depending on the nature of the hedge, changes in the fair value of the derivative will be either offset against the change in fair value of the hedged assets, liabilities, or firm commitments through earnings or recognized in other comprehensive income until the hedged item is recognized in earnings. Changes in the fair value of undesignated derivatives are recorded in earnings. Additionally, the Company is required to evaluate its contracts to determine whether the contracts are derivatives. Certain contracts that literally meet the definition of a derivative may be exempted as “normal purchases or normal sales”. Normal purchases and normal sales are contracts that provide for the purchase or sale of something other than a financial instrument or derivative instrument that will be delivered in quantities expected to be used or sold over a reasonable period in the normal course of business. Contracts that meet the requirements of normal purchases or normal sales are documented as normal and exempted from accounting and reporting requirements, and therefore, are not marked to market in our consolidated financial statements. In order to reduce the risks caused by market fluctuations, the Company occasionally hedges its anticipated corn, natural gas, and denaturant purchases and ethanol sales by entering into options and futures contracts. These contracts are used with the intention to fix the purchase price of anticipated requirements for corn in the Company’s ethanol production activities and the related sales price of ethanol. The fair value of these contracts is based on quoted prices in active exchange-traded or over-the-counter market conditions. Although the Company believes its commodity derivative positions are economic hedges, none have been formally designated as a hedge for accounting purposes and derivative positions are recorded on the balance sheet at their fair market value, with changes in fair value recognized in current period earnings or losses. The Company does not enter into financial instruments for trading or speculative purposes. The Company has adopted authoritative guidance related to “Derivatives and Hedging,” and has included the required enhanced quantitative and qualitative disclosure about objectives and strategies for using derivatives, quantitative disclosures about fair value amounts of gains and losses from derivative instruments, and disclosures about credit-risk-related contingent features in derivative agreements. See further discussion in Note 7. |
Property and Equipment | Property and Equipment Property and equipment are stated at cost. Depreciation is provided over the following estimated useful lives by use of the straight-line method. Asset Description Years Land improvements 5-20 years Railroad improvements 5-20 years Process equipment and tanks 5-40 years Administration building 10-40 years Office equipment 3-10 years Rolling stock 5-10 years Maintenance and repairs are expensed as incurred; major improvements and betterments are capitalized. Construction in progress expenditures will be depreciated using the straight-line method over their estimated useful lives once the assets are placed into service. |
Long-Lived Assets | Long-Lived Assets Long-lived assets, such as property and equipment, and purchased intangible assets subject to amortization, are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. When determining impairment losses, a long-lived asset should be grouped with other assets or liabilities at the lowest level for which identifiable cash flows are largely independent of the cash flows of other assets or liabilities. If circumstances require a long-lived asset be tested for possible impairment, the Company first compares undiscounted cash flows expected to be generated by an asset to the carrying value of the asset. If the carrying value of the long-lived asset is not recoverable on an undiscounted cash flow basis, impairment is recognized to the extent that the carrying value exceeds its fair value. Fair value is determined through various valuation techniques including, but not limited to, discounted cash flow models, quoted market values and third-party independent appraisals, as considered necessary. No impairment expense was recorded during fiscal 2020 and 2019. |
Investments | Investments On November 1, 2016, GFE subscribed to purchase 1,500 capital units of Ringneck Energy & Feed, LLC (“Ringneck”) at a price of $5,000 per unit for a total of $7,500,000. Ringneck is a South Dakota limited liability company that constructed an 80 million gallon per year ethanol manufacturing plant outside of Onida, South Dakota in Sully County. GFE’s investment is sufficient to secure the Company the right to appoint one director to the board of directors of Ringneck. GFE has appointed Steve Christensen, its CEO, to serve as its appointed director. GFE paid a down payment of $750,000 in connection with the subscription, and signed a promissory note for $6,750,000 for the remaining balance of the subscription. On August 2, 2017, following notice from Ringneck accepting GFE’s subscription and that payment of the balance of GFE’s subscription and promissory note was due, GFE borrowed $7.5 million under its credit facility with Project Hawkeye, LLC (“Project Hawkeye”) and paid $6,750,000 to Ringneck as payment for the remaining balance of GFE’s subscription. Project Hawkeye is an affiliate of Fagen, Inc., which is a member of GFE. On June 10, 2019, GFE subscribed to purchase an additional 100 capital units of Ringneck at a price of $5,000 per unit for a total of an additional $500,000. See Note 9 below for the terms of GFE’s credit facility with Project Hawkeye. On June 29, 2018, GFE executed a subscription agreement for investment in Harvestone Group, LLC (“Harvestone”), a Delaware limited liability company, and a Joinder to the Operating Agreement of Harvestone. In connection with the execution of the subscription agreement and joinder, GFE made a capital contribution of $2.0 million in exchange for twenty (20) preferred membership units. Harvestone is an ethanol marketing, logistics, and trading company headquartered in Franklin, Tennessee. Harvestone is owned by several other ethanol producers and other private investors, and its primary business is marketing and trading for member and non-member ethanol producers. The marketing and trading commenced in January 2019. The investments are accounted for by the equity method, under which the Company’s share of the net income of the investee is recognized as income in the Company’s Consolidated Statements of Operations and added to the investment account, and distributions received from the affiliates are treated as a reduction of the investment. Summarized financial information of Ringneck is as follows: October 31, 2020 2019 Current Assets $ 19,510,000 $ 10,407,000 Total Assets 149,434,000 146,986,000 Current Liabilities 16,206,000 7,612,000 Total Liabilities 69,439,000 67,916,000 Members' Equity 79,995,000 79,070,000 12 Months Ended October 31, 2020 2019 Revenue $ 114,768,000 $ 47,098,000 Gross Profit (Loss) 6,325,000 (3,115,000) Operating Profit (Loss) 7,758,000 (7,301,000) Net Profit (Loss) 424,000 (9,893,000) |
Fair Value of Financial Instruments | Fair Value of Financial Instruments The Company’s accounting for fair value measurements of assets and liabilities that are recognized or disclosed at fair value in the financial statements on a recurring or nonrecurring basis adhere to the Financial Accounting Standards Board (“FASB”) fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value. The Company has adopted guidance for fair value measurement related to nonfinancial items that are recognized and disclosed at fair value in the financial statements on a nonrecurring basis. The guidance establishes a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurements) and the lowest priority to measurements involving significant unobservable inputs (Level 3 measurements). The three levels of the fair value hierarchy are as follows: · Level 1 inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities that the Company has the ability to access at the measurement date. · Level 2 inputs include: 1. Quoted prices in active markets for similar assets or liabilities. 2. Quoted prices in markets that are observable for the asset or liability either directly or indirectly, for substantially the full term of the asset or liability. 3. Inputs that derived primarily from or corroborated by observable market date by correlation or other means. · Level 3 inputs are unobservable inputs for the asset or liability. The level in the fair value hierarchy within which a fair measurement in its entirety falls is based on the lowest level input that is significant to the fair value measurement in its entirety. Except for those assets and liabilities which are required by authoritative accounting guidance to be recorded at fair value, the Company has elected not to record any other assets or liabilities at fair value. No events occurred during the fiscal years ended October 31, 2020 or 2019 that required adjustment to the recognized balances of assets or liabilities, which are recorded at fair value on a nonrecurring basis. The carrying value of cash, accounts receivable, accounts payable and accrued liabilities approximates fair value due to the short maturity of these instruments. The Company obtains fair value measurements from an independent pricing service for corn derivative contracts. The fair value measurements consider observable data that may include dealer quotes and live trading levels from the Chicago Board of Trade and New York Mercantile Exchange markets. The fair value of the long-term debt is estimated based on anticipated interest rates which management believes would currently be available to the Company for similar issues of debt, taking into account the current credit risk of the Company and other market factors. The Company believes the carrying value of the debt instruments approximate fair value. |
Income Taxes | Income Taxes The Company is treated as a partnership for federal and state income tax purposes, and generally does not incur income taxes. Instead its earnings and losses are included in the income tax returns of its members. Therefore, no provision or liability for federal or state income taxes has been included in these financial statements. Differences exist between financial statement basis of assets and tax basis of assets and financial statement basis of liabilities and tax basis of liabilities. In addition, the Company uses the alternative depreciation system for tax depreciation instead of the straight-line method that is used for book depreciation, which also causes temporary differences. The Company’s tax year end is December 31. The Company had no significant uncertain tax positions as of October 31, 2020 or 2019 that would require disclosure, primarily due to the partnership tax status. The Company recognizes and measures tax benefits when realization of the benefits is uncertain under a two-step approach. The first step is to determine whether the benefit meets the more-likely-than-not condition for recognition and the second step is to determine the amount to be recognized based on the cumulative probability that exceeds 50%. Primarily due to the Company’s tax status as a partnership, the adoption of this guidance had no material impact on the Company’s financial condition or results of operations. The Company files income tax returns in the U.S. federal and Minnesota state jurisdictions. For years before 2017, the Company is no longer subject to U.S. Federal or state income tax examinations. |
Net Income (Loss) per Unit | Net Income (Loss) per Unit Basic net income (loss) per unit is computed by dividing net income (loss) by the weighted average number of members’ units outstanding during the period. Diluted net income per unit is computed by dividing net income by the weighted average number of members’ units and members’ unit equivalents outstanding during the period. There were no member unit equivalents outstanding during the periods presented; accordingly, for all periods presented, the calculations of the Company’s basic and diluted net income per unit are the same. |
Environmental Liabilities | Environmental Liabilities The Company’s operations are subject to environmental laws and regulations adopted by various governmental entities in the jurisdiction in which it operates. These laws require the Company to investigate and remediate the effects of the release or disposal of materials at its location. Accordingly, the Company has adopted policies, practices, and procedures in the areas of pollution control, occupational health, and the production, handling, storage, and use of hazardous materials to prevent material environmental or other damage, and to limit the financial liability, which could result from such events. Environmental liabilities are recorded when the liability is probable and the costs can be reasonably estimated. No expense has been recorded for the fiscal years ended October 31, 2020 or 2019. |
Goodwill | Goodwill Goodwill represents the cost in excess of the fair value of net assets acquired. The Company conducts impairment assessments annually or when events indicate a triggering event has occurred. A triggering event was noted due to the prolonged ongoing uncertainty in the global markets as a result of the COVID-19 pandemic and the net loss for fiscal year 2020. As such, an impairment test was performed on the Company's goodwill as of October 31, 2020 using a discounted cash flow model. This test resulted in a full impairment loss of approximately $1,372,000 at October 31, 2020. |
Reportable Operating Segments | Reportable Operating Segments Accounting Standards Codification (“ASC”) 280, “Segment Reporting,” establishes the standards for reporting information about segments in financial statements. Operating segments are defined as components of an enterprise for which separate financial information is available that is evaluated regularly by the chief operating decision maker in deciding how to allocate resources and in assessing performance. Therefore, in applying the criteria set forth in ASC 280, the Company determined that based on the nature of the products and production process and the expected financial results, the Company’s operations at GFE’s ethanol plant and HLBE’s plant, including the production and sale of ethanol and its co-products, are aggregated into one reporting segment. Additionally, the Company also realizes relatively immaterial revenue from natural gas pipeline operations at Agrinatural, HLBE’s majority owned subsidiary. Before and after accounting for intercompany eliminations, these revenues from Agrinatural’s represent less than less than 1% of our consolidated revenues and have little to no impact on the overall performance of the Company. Therefore, the Company does not separately review Agrinatural’s revenues, cost of sales or other operating performance information. Rather, the Company reviews Agrinatural’s natural gas pipeline financial data on a consolidated basis with the Company’s ethanol production operating segment. The Company believes that the presentation of separate operating performance information for Agrinatural’s natural gas pipeline operations would not provide meaningful information to a reader of the Company’s consolidated financial statements and would not achieve the basic principles and objectives of ASC 280. |
Recently Adopted Accounting Pronouncements | Recently Adopted Accounting Pronouncements In February 2016, the FASB issued new guidance on accounting for leases under Accounting Standards Codification 842 (ASC 842). Under the new guidance, lessees are required to recognize the following for all leases (with the exception of short-term leases) at the commencement date: (1) a lease liability, which is a lessee’s obligation to make lease payments arising from a lease, measured on a discounted cash flow basis; and (2) a “right of use” asset, which is an asset that represents the lessee’s right to use the specified asset for the lease term. Lease expense under the new guidance is substantially the same as prior to the adoption. See Note 11 for further information. In January 2017, FASB issued ASU No. 2017-04, Intangibles–Goodwill and Other (Topic 350): Simplifying the Test of Goodwill Impairment, which eliminates Step 2 from the goodwill impairment test (i.e., the requirement for an entity to calculate the implied fair value of goodwill in measuring a goodwill impairment loss). ASU 2017-04 provides that a company should perform its goodwill impairment test by comparing the fair value of a reporting unit with its carrying value and should recognize an impairment charge if the carrying value exceeds the fair value of the reporting unit, but only to the extent of the goodwill amount allocated to that reporting unit. Companies still have the option to perform a qualitative assessment to determine if the quantitative impairment test is necessary. We early adopted this standard as of November 1, 2019. This standard did not have a significant effect on our accounting policies or on our consolidated financial statements and related disclosures. |
SUMMARY OF SIGNIFICANT ACCOUN_3
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Tables) | 12 Months Ended |
Oct. 31, 2020 | |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | |
Schedule of property and equipment estimated useful lives | Asset Description Years Land improvements 5-20 years Railroad improvements 5-20 years Process equipment and tanks 5-40 years Administration building 10-40 years Office equipment 3-10 years Rolling stock 5-10 years |
Schedule of summarized financial information of equity method investment | October 31, 2020 2019 Current Assets $ 19,510,000 $ 10,407,000 Total Assets 149,434,000 146,986,000 Current Liabilities 16,206,000 7,612,000 Total Liabilities 69,439,000 67,916,000 Members' Equity 79,995,000 79,070,000 12 Months Ended October 31, 2020 2019 Revenue $ 114,768,000 $ 47,098,000 Gross Profit (Loss) 6,325,000 (3,115,000) Operating Profit (Loss) 7,758,000 (7,301,000) Net Profit (Loss) 424,000 (9,893,000) |
REVENUE (Tables)
REVENUE (Tables) | 12 Months Ended |
Oct. 31, 2020 | |
REVENUE | |
Schedule of disaggregated revenue by source | Total Ethanol $ Distillers’ Grains Corn Oil Other Natural Gas Pipeline Total Revenues $ Total Ethanol $ Distillers’ Grains Corn Oil Other Natural Gas Pipeline Total Revenues $ |
FAIR VALUE (Tables)
FAIR VALUE (Tables) | 12 Months Ended |
Oct. 31, 2020 | |
FAIR VALUE | |
Schedule of derivative assets and liabilities measured at fair value | Fair Value Measurement Using Quoted Prices Significant Other Significant Carrying Amount in in Active Markets Observable Inputs Unobservable Inputs Financial Assets: Consolidated Balance Sheet Fair Value (Level 1) (Level 2) (Level 3) Commodity Derivative Instruments - Ethanol $ 56,050 $ 56,050 $ 56,050 $ — $ — Financial Liabilities: Commodity Derivative Instruments - Corn $ 816,478 $ 816,478 $ 816,478 $ — $ — The following table provides information on those derivative assets measured at fair value on a recurring basis at October 31, 2019: Fair Value Measurement Using Quoted Prices Significant Other Significant Carrying Amount in in Active Markets Observable Inputs Unobservable Inputs Financial Assets: Consolidated Balance Sheet Fair Value (Level 1) (Level 2) (Level 3) Commodity Derivative Instruments - Corn $ 632,773 $ 632,773 $ 632,773 $ — $ — Commodity Derivative Instruments - Ethanol $ 190,325 $ 190,325 $ 190,325 $ — $ — |
CONCENTRATIONS (Tables)
CONCENTRATIONS (Tables) | 12 Months Ended |
Oct. 31, 2020 | |
Granite Falls Energy, LLC Excluding Heron Lake BioEnergy, LLC | Total revenues | |
Schedule of concentration risk | October 31, 2020 October 31, 2019 Eco-Energy, Inc. - Ethanol RPMG, Inc. - Distillers' Grains & Corn Oil |
Granite Falls Energy, LLC Excluding Heron Lake BioEnergy, LLC | Accounts receivable | |
Schedule of concentration risk | October 31, 2020 October 31, 2019 Eco-Energy, Inc. - Ethanol RPMG, Inc. - Distillers' Grains & Corn Oil |
Heron Lake BioEnergy, LLC | Total revenues | |
Schedule of concentration risk | October 31, 2020 October 31, 2019 Eco-Energy, Inc. - Ethanol Gavilon Ingredients, LLC - Distillers' Grains RPMG, Inc. - Corn Oil |
Heron Lake BioEnergy, LLC | Accounts receivable | |
Schedule of concentration risk | October 31, 2020 October 31, 2019 Eco-Energy, Inc. - Ethanol Gavilon Ingredients, LLC - Distillers' Grains RPMG, Inc. - Corn Oil |
INVENTORY (Tables)
INVENTORY (Tables) | 12 Months Ended |
Oct. 31, 2020 | |
INVENTORY | |
Schedule of Inventory | 2020 2019 Raw materials $ 4,893,502 $ 3,253,361 Supplies 3,070,458 3,330,513 Work in process 1,480,871 1,434,552 Finished goods 4,346,974 5,784,599 Totals $ 13,791,805 $ 13,803,025 |
DERIVATIVE INSTRUMENTS (Tables)
DERIVATIVE INSTRUMENTS (Tables) | 12 Months Ended |
Oct. 31, 2020 | |
DERIVATIVE INSTRUMENTS | |
Schedule of derivative instruments in Statements of Financial Position | The following tables provide details regarding the Company’s derivative instruments at October 31, 2020, none of which were designated as hedging instruments: Consolidated Balance Sheet Location Assets Liabilities Corn contracts - GFE Commodity derivative instruments $ — $ 642,550 Corn contracts - HLBE Commodity derivative instruments — 173,928 Ethanol contracts - GFE Commodity derivative instruments 40,900 — Ethanol contracts - HLBE Commodity derivative instruments 15,150 — Totals $ 56,050 $ 816,478 As of October 31, 2019, the total notional amount of GFE’s outstanding corn derivative instruments was approximately 7,495,000 bushels, comprised of long corn positions on 3,345,000 bushels that were entered into to hedge forecasted ethanol sales through July 2020, and short corn positions on 4,150,000 bushels that were entered into to hedge forecasted corn purchases through December 2022. Additionally, there are corn options positions of 4,000,000 bushels through March 2020. There may be offsetting positions that are not shown on a net basis that could lower the notional amount of positions outstanding. As of October 31, 2019, GFE did not have any cash collateral (restricted cash) related to derivatives held by a broker. As of October 31, 2019, the total notional amount of HLBE’s outstanding corn derivative instruments was approximately 5,398,000 bushels, comprised of long corn futures positions on 2,131,000 bushels that were entered into to hedge forecasted ethanol sales through July 2020, and short corn positions on 3,267,000 bushels that were entered into to hedge forecasted corn purchases through December 2021. Additionally, there are corn options positions of 4,000,000 bushels through March 2020. There may be offsetting positions that are not shown on a net basis that could lower the notional amount of positions outstanding. As of October 31, 2019, HLBE had approximately $52,000 in cash collateral (restricted cash) related to derivatives held by a broker. The following tables provide details regarding the Company’s derivative instruments at October 31, 2019, none of which were designated as hedging instruments: Consolidated Balance Sheet Location Assets Liabilities Corn contracts - GFE Commodity derivative instruments $ 612,713 $ — Corn contracts - HLBE Commodity derivative instruments 20,060 — Ethanol contracts - GFE Commodity derivative instruments 114,562 — Ethanol contracts - HLBE Commodity derivative instruments 75,763 — Totals $ 823,098 $ — |
Schedule of gains (losses) from derivative instruments | Consolidated Statement Fiscal Year Ended October 31, of Operations Location 2020 2019 Corn contracts Cost of Goods Sold $ (2,369,337) $ 1,105,528 Ethanol contracts Revenues (350,360) 220,080 Total gain (loss) $ (2,719,697) $ 1,325,608 |
PROPERTY AND EQUIPMENT (Tables)
PROPERTY AND EQUIPMENT (Tables) | 12 Months Ended |
Oct. 31, 2020 | |
PROPERTY AND EQUIPMENT | |
Schedule of property and equipment | October 31, 2020 October 31, 2019 Land and improvements $ 13,926,199 $ 13,697,790 Railroad improvements 9,045,112 9,045,112 Process equipment and tanks 134,233,838 134,291,374 Administration building 569,328 569,328 Office equipment 1,083,694 1,083,694 Rolling stock 2,150,700 2,150,700 Construction in progress 4,680,716 58,319 165,689,587 160,896,317 Less: accumulated depreciation (140,849,274) (102,627,175) Net property and equipment $ 54,965,983 $ 58,269,142 |
DEBT FACILITIES (Tables)
DEBT FACILITIES (Tables) | 12 Months Ended |
Oct. 31, 2020 | |
DEBT FACILITIES | |
Schedule of debt financing | October 31, 2020 October 31, 2019 GRANITE FALLS ENERGY: Revolving term loan, see terms above. $ — $ — Seasonal revolving loan, see terms above. $ — $ — Term note payable to Project Hawkeye, see terms above. 6,339,286 7,410,714 SBA Paycheck Protection Program Loan 703,900 — HERON LAKE BIOENERGY: Amended revolving term note payable to lending institution, see terms above. 7,891,426 — Single advance term note payable to lending institution, see terms above. 3,000,000 — Assessment payable as part of water treatment agreement, due in semi-annual installments of $189,393 with interest at 6.55%, enforceable by statutory lien, with the final payment due in October 2021. HLBE made deposits for one years' worth of debt service payments of approximately $364,000, which is included with other assets that are held on deposit to be applied with the final payments of the assessment. 300,551 634,180 SBA Paycheck Protection Program Loan 595,693 — Totals 18,830,856 8,044,894 Less: amounts due within one year 12,954,538 1,405,406 Net long-term debt $ 5,876,318 $ 6,639,488 |
Schedule of annual maturities of debt | 2021 $ 12,954,538 2022 1,679,890 2023 1,071,429 2024 1,071,429 2025 1,071,429 Thereafter 982,141 Total debt $ 18,830,856 |
LEASES (Tables)
LEASES (Tables) | 12 Months Ended |
Oct. 31, 2020 | |
LEASES | |
Summary of remaining annual maturities of operating lease liabilities | 2021 $ 4,459,300 2022 4,315,800 2023 4,056,600 2024 3,442,200 2025 3,034,200 Thereafter 2,677,450 Totals 21,985,550 Less: Amount representing interest 2,601,896 Lease liabilities $ 19,383,654 |
INCOME TAXES (Tables)
INCOME TAXES (Tables) | 12 Months Ended |
Oct. 31, 2020 | |
INCOME TAXES | |
Schedule of differences between financial statement basis and tax basis of assets | October 31, 2020 October 31, 2019 Financial Statement basis of assets * $ 116,197,703 $ 106,054,709 Organization & start-up costs capitalized for tax purposes, net 12,415 89,389 Tax depreciation greater than book depreciation (6,156,300) (9,349,983) Unrealized derivatives gains (losses) of commodity derivative instruments (40,900) (727,275) Capitalized inventory 35,777 52,927 Operating lease right of use assets (10,092,405) — Net effect of consolidation of acquired subsidiary (37,161,919) (28,135,408) Income tax basis of assets $ 62,794,371 $ 67,984,359 *The Financial Statement basis of assets is the total assets of GFE and HLBE. See consolidated balance sheet in financial statements. Financial Statement basis of liabilities $ 54,305,876 $ 21,370,160 Accrued rail car maintenance (825,000) (825,000) Other accruals (122,041) (84,383) Operating lease liability (10,092,405) — Net effect of consolidation of acquired subsidiary (10,065,001) (734,890) Income tax basis of liabilities $ 33,201,429 $ 19,725,887 |
SUMMARY OF SIGNIFICANT ACCOUN_4
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details) gal in Millions | 12 Months Ended |
Oct. 31, 2020gal | |
Granite Falls Energy, LLC Excluding Heron Lake BioEnergy, LLC | |
Summary of significant accounting policies | |
Plant production capacity | 60 |
Production volume permitted | 70 |
Heron Lake BioEnergy, LLC | |
Summary of significant accounting policies | |
Plant production capacity | 60 |
Production volume permitted | 72.3 |
Heron Lake BioEnergy, LLC | |
Summary of significant accounting policies | |
Noncontrolling Interest, Ownership Percentage by Noncontrolling Owners | 49.30% |
Heron Lake BioEnergy, LLC | Project Viking, LLC | |
Summary of significant accounting policies | |
Ownership percentage | 50.70% |
Project Viking, LLC | |
Summary of significant accounting policies | |
Ownership percentage | 100.00% |
Agrinatural, LLC | |
Summary of significant accounting policies | |
Noncontrolling Interest, Ownership Percentage by Noncontrolling Owners | 27.00% |
SUMMARY OF SIGNIFICANT ACCOUN_5
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, Other (Details) | 12 Months Ended | |
Oct. 31, 2020USD ($)segmentshares | Oct. 31, 2019USD ($)shares | |
Net Income per Unit | ||
Member units outstanding ( in shares) | shares | 0 | 0 |
Environmental Liabilities | ||
Environmental liability expense | $ 0 | $ 0 |
Goodwill | ||
Goodwill impairment | $ 1,372,473 | |
Reportable Operating Segments | ||
Number of reportable segments | segment | 1 | |
Agrinatural, LLC | Maximum | ||
Reportable Operating Segments | ||
Revenues of subsidiary, percentage | 1.00% |
SUMMARY OF SIGNIFICANT ACCOUN_6
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, Revenue Recognition (Details) | 12 Months Ended |
Oct. 31, 2020USD ($)company | |
CONCENTRATIONS | |
Number of distinct marketing companies | company | 2 |
Goodwill impairment | $ | $ 1,372,473 |
Ethanol | Eco-Energy, Inc. | Revenue from product line | |
CONCENTRATIONS | |
Concentration percentage | 100.00% |
Distillers grains | RPMG, Inc. | Revenue from product line | |
CONCENTRATIONS | |
Concentration percentage | 100.00% |
Corn oil | RPMG, Inc. | Revenue from product line | |
CONCENTRATIONS | |
Concentration percentage | 100.00% |
SUMMARY OF SIGNIFICANT ACCOUN_7
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, Useful Life (Details) | 12 Months Ended |
Oct. 31, 2020 | |
Land improvements | Minimum | |
Property, Plant and Equipment | |
Property and Equipment, useful life | 5 years |
Land improvements | Maximum | |
Property, Plant and Equipment | |
Property and Equipment, useful life | 20 years |
Railroad improvements | Minimum | |
Property, Plant and Equipment | |
Property and Equipment, useful life | 5 years |
Railroad improvements | Maximum | |
Property, Plant and Equipment | |
Property and Equipment, useful life | 20 years |
Process equipment and tanks | Minimum | |
Property, Plant and Equipment | |
Property and Equipment, useful life | 5 years |
Process equipment and tanks | Maximum | |
Property, Plant and Equipment | |
Property and Equipment, useful life | 40 years |
Administration building | Minimum | |
Property, Plant and Equipment | |
Property and Equipment, useful life | 10 years |
Administration building | Maximum | |
Property, Plant and Equipment | |
Property and Equipment, useful life | 40 years |
Office equipment | Minimum | |
Property, Plant and Equipment | |
Property and Equipment, useful life | 3 years |
Office equipment | Maximum | |
Property, Plant and Equipment | |
Property and Equipment, useful life | 10 years |
Rolling stock | Minimum | |
Property, Plant and Equipment | |
Property and Equipment, useful life | 5 years |
Rolling stock | Maximum | |
Property, Plant and Equipment | |
Property and Equipment, useful life | 10 years |
SUMMARY OF SIGNIFICANT ACCOUN_8
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, Investments (Details) $ / shares in Units, gal in Millions | Jun. 10, 2019USD ($)$ / sharesshares | Jun. 29, 2018USD ($)shares | Aug. 02, 2017USD ($) | Nov. 01, 2016USD ($)director$ / sharessharesgal | Oct. 31, 2020USD ($) | Oct. 31, 2019USD ($) |
Long-Lived Assets | ||||||
Impairment of long-lived assets | $ 0 | $ 0 | ||||
Investment | ||||||
Payment for equity method investment | 500,000 | |||||
Proceeds from long-term debt | 66,305,585 | |||||
Summarized Financial Information of Equity Method Investment | ||||||
Current Assets | 31,715,428 | 36,163,256 | ||||
Total Assets | 116,197,703 | 106,054,709 | ||||
Current Liabilities | 31,252,239 | 13,354,672 | ||||
Total Liabilities | 54,305,876 | 21,370,160 | ||||
Income Statement Summarized Financial Information of Equity Method Investment | ||||||
Gross Profit (Loss) | (11,077,253) | (3,783,155) | ||||
Net Profit (Loss) | (20,567,722) | (11,021,272) | ||||
Ringneck Energy and; Feed, LLC | ||||||
Investment | ||||||
Expected ethanol production capacity | gal | 80 | |||||
Summarized Financial Information of Equity Method Investment | ||||||
Current Assets | 19,510,000 | 10,407,000 | ||||
Total Assets | 149,434,000 | 146,986,000 | ||||
Current Liabilities | 16,206,000 | 7,612,000 | ||||
Total Liabilities | 69,439,000 | 67,916,000 | ||||
Members' Equity | 79,995,000 | 79,070,000 | ||||
Income Statement Summarized Financial Information of Equity Method Investment | ||||||
Revenues | 114,768,000 | 47,098,000 | ||||
Gross Profit (Loss) | 6,325,000 | (3,115,000) | ||||
Operating Profit (Loss) | 7,758,000 | (7,301,000) | ||||
Net Profit (Loss) | $ 424,000 | $ (9,893,000) | ||||
Granite Falls Energy, LLC Excluding Heron Lake BioEnergy, LLC | Ringneck Energy and; Feed, LLC | ||||||
Investment | ||||||
Units purchased | shares | 100 | 1,500 | ||||
Price per unit (in dollars per unit) | $ / shares | $ 5,000 | $ 5,000 | ||||
Total cost | $ 500,000 | $ 7,500,000 | ||||
Number of directors Company has the right to appoint | director | 1 | |||||
Payment for equity method investment | $ 6,750,000 | $ 750,000 | ||||
Note payable | $ 6,750,000 | |||||
Granite Falls Energy, LLC Excluding Heron Lake BioEnergy, LLC | Harvestone Group, LLC | ||||||
Investment | ||||||
Units purchased | shares | 20 | |||||
Payment for equity method investment | $ 2,000,000 | |||||
Granite Falls Energy, LLC Excluding Heron Lake BioEnergy, LLC | Term note payable to Project Hawkeye | Ringneck Energy and; Feed, LLC | ||||||
Investment | ||||||
Proceeds from long-term debt | $ 7,500,000 |
RISKS AND UNCERTAINTIES Narrati
RISKS AND UNCERTAINTIES Narrative (Details) gal in Millions | 1 Months Ended | 12 Months Ended | |
Oct. 31, 2018 | Oct. 31, 2020USD ($) | Dec. 19, 2019gal | |
Conventional Ethanol | |||
Concentration Risk | |||
Renewable volume requirements | 15,000 | ||
Advanced Biofuels | |||
Concentration Risk | |||
Renewable volume requirements | 5,090 | ||
Cellulosic Ethanol | |||
Concentration Risk | |||
Renewable volume requirements | 590 | ||
Renewable Fuels | |||
Concentration Risk | |||
Renewable volume requirements | 20,090 | ||
Percentage mandatory renewable fuel volumes are reduced | 20.00% | ||
Number of consecutive years | $ | 2 | ||
Threshold percentage | 20.00% | ||
Minimum | Renewable Fuels | |||
Concentration Risk | |||
Renewable volume requirements | 30,000 | ||
Minimum | Total revenues | Product | Ethanol | |||
Concentration Risk | |||
Concentration percentage | 75.00% | ||
Minimum | Cost of goods sold | Product | Corn | |||
Concentration Risk | |||
Concentration percentage | 65.00% | ||
Maximum | Total revenues | Product | Ethanol | |||
Concentration Risk | |||
Concentration percentage | 90.00% | ||
Maximum | Cost of goods sold | Product | Corn | |||
Concentration Risk | |||
Concentration percentage | 85.00% |
REVENUE (Details)
REVENUE (Details) - USD ($) | 12 Months Ended | |
Oct. 31, 2020 | Oct. 31, 2019 | |
Revenue Recognition | ||
Total Revenues | $ 164,953,841 | $ 208,777,119 |
Payment terms | 10 days | |
Ethanol | ||
Revenue Recognition | ||
Total Revenues | $ 126,605,211 | 161,590,158 |
Distillers grains | ||
Revenue Recognition | ||
Total Revenues | 29,672,577 | 37,045,620 |
Corn oil | ||
Revenue Recognition | ||
Total Revenues | 6,590,481 | 7,586,232 |
Other | ||
Revenue Recognition | ||
Total Revenues | 678,226 | 1,123,217 |
Natural Gas | ||
Revenue Recognition | ||
Total Revenues | $ 1,407,346 | $ 1,431,892 |
Payment terms | 20 days |
FAIR VALUE (Details)
FAIR VALUE (Details) - USD ($) | Oct. 31, 2020 | Oct. 31, 2019 |
Fair value | ||
Financial Assets | $ 56,050 | $ 823,098 |
Financial Liabilities | 816,478 | |
Corn Contracts | Carrying Amount | ||
Fair value | ||
Financial Assets | 632,773 | |
Financial Liabilities | 816,478 | |
Corn Contracts | Fair Value, Measurements, Recurring | Estimate of Fair Value Measurement | ||
Fair value | ||
Financial Assets | 632,773 | |
Financial Liabilities | 816,478 | |
Corn Contracts | Fair Value, Inputs, Level 1 | Fair Value, Measurements, Recurring | Estimate of Fair Value Measurement | ||
Fair value | ||
Financial Assets | 632,773 | |
Financial Liabilities | 816,478 | |
Ethanol Contracts | Carrying Amount | ||
Fair value | ||
Financial Assets | 56,050 | 190,325 |
Ethanol Contracts | Fair Value, Measurements, Recurring | Estimate of Fair Value Measurement | ||
Fair value | ||
Financial Assets | 56,050 | 190,325 |
Ethanol Contracts | Fair Value, Inputs, Level 1 | Fair Value, Measurements, Recurring | Estimate of Fair Value Measurement | ||
Fair value | ||
Financial Assets | $ 56,050 | $ 190,325 |
CONCENTRATIONS (Details)
CONCENTRATIONS (Details) - customer | 12 Months Ended | |
Oct. 31, 2020 | Oct. 31, 2019 | |
Granite Falls Energy, LLC Excluding Heron Lake BioEnergy, LLC | ||
Concentration Risk [Line Items] | ||
Number of Major Customers | 2 | 2 |
Heron Lake BioEnergy, LLC | ||
Concentration Risk [Line Items] | ||
Number of Major Customers | 3 | 3 |
Total revenues | Customer Concentration Risk | Eco-Energy, Inc. | Granite Falls Energy, LLC Excluding Heron Lake BioEnergy, LLC | Ethanol Production | ||
Concentration Risk [Line Items] | ||
Concentration Risk, Percentage | 77.00% | 77.50% |
Total revenues | Customer Concentration Risk | Eco-Energy, Inc. | Heron Lake BioEnergy, LLC | Ethanol Production | ||
Concentration Risk [Line Items] | ||
Concentration Risk, Percentage | 76.70% | 77.30% |
Total revenues | Customer Concentration Risk | Gavilon Ingredients, LLC | Heron Lake BioEnergy, LLC | Distillers' Grains | ||
Concentration Risk [Line Items] | ||
Concentration Risk, Percentage | 15.90% | 16.90% |
Total revenues | Customer Concentration Risk | RPMG, Inc. | Granite Falls Energy, LLC Excluding Heron Lake BioEnergy, LLC | Distillers' Grains and Corn Oil | ||
Concentration Risk [Line Items] | ||
Concentration Risk, Percentage | 23.00% | 22.30% |
Total revenues | Customer Concentration Risk | RPMG, Inc. | Heron Lake BioEnergy, LLC | Corn oil | ||
Concentration Risk [Line Items] | ||
Concentration Risk, Percentage | 3.80% | 3.30% |
Accounts receivable | Credit Concentration Risk | Eco-Energy, Inc. | Granite Falls Energy, LLC Excluding Heron Lake BioEnergy, LLC | Ethanol Production | ||
Concentration Risk [Line Items] | ||
Concentration Risk, Percentage | 72.10% | 60.70% |
Accounts receivable | Credit Concentration Risk | Eco-Energy, Inc. | Heron Lake BioEnergy, LLC | Ethanol Production | ||
Concentration Risk [Line Items] | ||
Concentration Risk, Percentage | 54.80% | 80.00% |
Accounts receivable | Credit Concentration Risk | Gavilon Ingredients, LLC | Heron Lake BioEnergy, LLC | Distillers' Grains | ||
Concentration Risk [Line Items] | ||
Concentration Risk, Percentage | 20.00% | 15.30% |
Accounts receivable | Credit Concentration Risk | RPMG, Inc. | Granite Falls Energy, LLC Excluding Heron Lake BioEnergy, LLC | Distillers' Grains and Corn Oil | ||
Concentration Risk [Line Items] | ||
Concentration Risk, Percentage | 24.60% | 36.10% |
Accounts receivable | Credit Concentration Risk | RPMG, Inc. | Heron Lake BioEnergy, LLC | Corn oil | ||
Concentration Risk [Line Items] | ||
Concentration Risk, Percentage | 6.40% | 2.80% |
INVENTORY (Details)
INVENTORY (Details) - USD ($) | 12 Months Ended | |
Oct. 31, 2020 | Oct. 31, 2019 | |
Inventory | ||
Raw materials | $ 4,893,502 | $ 3,253,361 |
Supplies | 3,070,458 | 3,330,513 |
Work in process | 1,480,871 | 1,434,552 |
Finished goods | 4,346,974 | 5,784,599 |
Totals | 13,791,805 | 13,803,025 |
Ethanol | ||
Inventory | ||
Gain (loss) on inventories | $ 383,000 | 547,000 |
Corn | ||
Inventory | ||
Gain (loss) on inventories | $ 47,000 |
DERIVATIVE INSTRUMENTS - Assets
DERIVATIVE INSTRUMENTS - Assets And Liabilities (Details) | 12 Months Ended | |
Oct. 31, 2020USD ($)bu | Oct. 31, 2019USD ($)bu | |
Derivatives, Fair Value | ||
Cash collateral (restricted cash) | $ 2,156,694 | $ 52,516 |
Financial Assets | 56,050 | $ 823,098 |
Derivative liabilities | $ 816,478 | |
Commodity Contract | ||
Derivatives, Fair Value | ||
Maximum term of corn, ethanol and natural gas derivatives entered to protect cash flows (in months) | 24 months | |
Granite Falls Energy, LLC Excluding Heron Lake BioEnergy, LLC | Accounts Payable | ||
Derivatives, Fair Value | ||
Cash collateral (restricted cash) | $ 1,643,000 | |
Granite Falls Energy, LLC Excluding Heron Lake BioEnergy, LLC | Corn Contracts | ||
Derivatives, Fair Value | ||
Total nonmonetary notional amount outstanding | bu | 4,275,000 | 7,495,000 |
Additional nonmonetary notional amount | bu | 1,920,000 | 4,000,000 |
Granite Falls Energy, LLC Excluding Heron Lake BioEnergy, LLC | Derivatives held by a broker | ||
Derivatives, Fair Value | ||
Cash collateral (restricted cash) | $ 0 | |
Granite Falls Energy, LLC Excluding Heron Lake BioEnergy, LLC | Long/Purchase position | Corn Contracts | ||
Derivatives, Fair Value | ||
Total nonmonetary notional amount outstanding | bu | 760,000 | 3,345,000 |
Granite Falls Energy, LLC Excluding Heron Lake BioEnergy, LLC | Short/Sale position | Corn Contracts | ||
Derivatives, Fair Value | ||
Total nonmonetary notional amount outstanding | bu | 3,515,000 | 4,150,000 |
Heron Lake BioEnergy, LLC | Corn Contracts | ||
Derivatives, Fair Value | ||
Total nonmonetary notional amount outstanding | bu | 2,095,000 | 5,398,000 |
Additional nonmonetary notional amount | bu | 1,380,000 | 4,000,000 |
Heron Lake BioEnergy, LLC | Derivatives held by a broker | ||
Derivatives, Fair Value | ||
Cash collateral (restricted cash) | $ 514,000 | $ 52,000 |
Heron Lake BioEnergy, LLC | Long/Purchase position | Corn Contracts | ||
Derivatives, Fair Value | ||
Total nonmonetary notional amount outstanding | bu | 325,000 | 2,131,000 |
Heron Lake BioEnergy, LLC | Short/Sale position | Corn Contracts | ||
Derivatives, Fair Value | ||
Total nonmonetary notional amount outstanding | bu | 1,770,000 | 3,267,000 |
Not Designated as Hedging Instruments | ||
Derivatives, Fair Value | ||
Financial Assets | $ 56,050 | $ 823,098 |
Derivative liabilities | 816,478 | |
Not Designated as Hedging Instruments | Granite Falls Energy, LLC Excluding Heron Lake BioEnergy, LLC | Corn Contracts | ||
Derivatives, Fair Value | ||
Financial Assets | 612,713 | |
Derivative liabilities | 642,550 | |
Not Designated as Hedging Instruments | Granite Falls Energy, LLC Excluding Heron Lake BioEnergy, LLC | Ethanol Contracts | ||
Derivatives, Fair Value | ||
Financial Assets | 40,900 | 114,562 |
Not Designated as Hedging Instruments | Heron Lake BioEnergy, LLC | Corn Contracts | ||
Derivatives, Fair Value | ||
Financial Assets | 20,060 | |
Derivative liabilities | 173,928 | |
Not Designated as Hedging Instruments | Heron Lake BioEnergy, LLC | Ethanol Contracts | ||
Derivatives, Fair Value | ||
Financial Assets | $ 15,150 | $ 75,763 |
DERIVATIVE INSTRUMENTS - Income
DERIVATIVE INSTRUMENTS - Income Statement (Details) - Not Designated as Hedging Instruments - USD ($) | 12 Months Ended | |
Oct. 31, 2020 | Oct. 31, 2019 | |
Derivative Instruments, Gain (Loss) | ||
Total gain | $ (2,719,697) | $ 1,325,608 |
Cost of Goods Sold | Corn Contracts | ||
Derivative Instruments, Gain (Loss) | ||
Total gain | (2,369,337) | 1,105,528 |
Revenues | Ethanol Contracts | ||
Derivative Instruments, Gain (Loss) | ||
Total gain | $ (350,360) | $ 220,080 |
PROPERTY AND EQUIPMENT (Details
PROPERTY AND EQUIPMENT (Details) - USD ($) | 1 Months Ended | 3 Months Ended | 12 Months Ended | |
Jan. 31, 2021 | Oct. 31, 2020 | Oct. 31, 2020 | Oct. 31, 2019 | |
Property, Plant and Equipment | ||||
Property and equipment, gross | $ 165,689,587 | $ 165,689,587 | $ 160,896,317 | |
Less: accumulated depreciation | (140,849,274) | (140,849,274) | (102,627,175) | |
Net property and equipment | 54,965,983 | 54,965,983 | 58,269,142 | |
Depreciation | 9,311,000 | 9,403,000 | ||
Gain (Loss) on Disposition of Property Plant Equipment, Excluding Oil and Gas Property and Timber Property | 1,800,000 | |||
Forecast | ||||
Property, Plant and Equipment | ||||
Property, Plant and Equipment, Additions | $ 5,200,000 | |||
Land and improvements | ||||
Property, Plant and Equipment | ||||
Property and equipment, gross | 13,926,199 | 13,926,199 | 13,697,790 | |
Railroad improvements | ||||
Property, Plant and Equipment | ||||
Property and equipment, gross | 9,045,112 | 9,045,112 | 9,045,112 | |
Process equipment and tanks | ||||
Property, Plant and Equipment | ||||
Property and equipment, gross | 134,233,838 | 134,233,838 | 134,291,374 | |
Administration building | ||||
Property, Plant and Equipment | ||||
Property and equipment, gross | 569,328 | 569,328 | 569,328 | |
Office equipment | ||||
Property, Plant and Equipment | ||||
Property and equipment, gross | 1,083,694 | 1,083,694 | 1,083,694 | |
Rolling stock | ||||
Property, Plant and Equipment | ||||
Property and equipment, gross | 2,150,700 | 2,150,700 | 2,150,700 | |
Construction in progress | ||||
Property, Plant and Equipment | ||||
Property and equipment, gross | $ 4,680,716 | $ 4,680,716 | $ 58,319 |
DEBT FACILITIES - Granite Falls
DEBT FACILITIES - Granite Falls Energy (Details) - USD ($) | Jun. 10, 2019 | Aug. 02, 2017 | Nov. 01, 2016 | Oct. 31, 2020 | Sep. 30, 2020 | Oct. 31, 2019 | Sep. 08, 2017 |
Line of Credit Facility | |||||||
Proceeds from long-term debt | $ 66,305,585 | ||||||
Cash collateral (restricted cash) | 2,156,694 | $ 52,516 | |||||
Loan received | 1,299,593 | ||||||
Seasonal revolving term loan | Granite Falls Energy, LLC Excluding Heron Lake BioEnergy, LLC | |||||||
Line of Credit Facility | |||||||
Credit facility maximum | 11,000,000 | $ 11,000,000 | $ 6,000,000 | ||||
Amounts outstanding under the credit facility | $ 0 | ||||||
Spread above variable interest rate | 3.25% | ||||||
Cash collateral (restricted cash) | $ 0 | ||||||
Seasonal revolving term loan | Granite Falls Energy, LLC Excluding Heron Lake BioEnergy, LLC | Minimum | |||||||
Line of Credit Facility | |||||||
Interest rate, stated percentage | 0.00% | ||||||
Term note payable to Project Hawkeye | Granite Falls Energy, LLC Excluding Heron Lake BioEnergy, LLC | |||||||
Line of Credit Facility | |||||||
Credit facility maximum | $ 7,500,000 | ||||||
Interest rate (as a percent) | 3.55% | 4.82% | |||||
Interest rate floor (as a percent) | 3.55% | ||||||
Maximum period of annual interest payments only | 2 years | ||||||
Debt instrument amortization period after first two years | 7 years | ||||||
One Month LIBOR | Seasonal revolving term loan | Granite Falls Energy, LLC Excluding Heron Lake BioEnergy, LLC | |||||||
Line of Credit Facility | |||||||
Interest rate (as a percent) | 3.39% | ||||||
One Month LIBOR | Term note payable to Project Hawkeye | Granite Falls Energy, LLC Excluding Heron Lake BioEnergy, LLC | |||||||
Line of Credit Facility | |||||||
Spread above variable interest rate | 3.05% | ||||||
Ringneck Energy and; Feed, LLC | Granite Falls Energy, LLC Excluding Heron Lake BioEnergy, LLC | |||||||
Line of Credit Facility | |||||||
Units purchased | 100 | 1,500 | |||||
Ringneck Energy and; Feed, LLC | Equity securities | Granite Falls Energy, LLC Excluding Heron Lake BioEnergy, LLC | |||||||
Line of Credit Facility | |||||||
Units purchased | 1,500 | ||||||
Ringneck Energy and; Feed, LLC | Term note payable to Project Hawkeye | Granite Falls Energy, LLC Excluding Heron Lake BioEnergy, LLC | |||||||
Line of Credit Facility | |||||||
Proceeds from long-term debt | $ 7,500,000 |
DEBT FACILITIES - Heron Lake Bi
DEBT FACILITIES - Heron Lake BioEnergy (Details) | Jan. 01, 2021USD ($) | Oct. 01, 2020USD ($) | Apr. 18, 2020USD ($) | Apr. 17, 2020USD ($) | Feb. 28, 2021USD ($) | Jun. 30, 2020USD ($)installment | Mar. 31, 2020USD ($) | Apr. 30, 2020USD ($) | Jan. 31, 2020USD ($) | Oct. 31, 2020USD ($) | Feb. 16, 2021USD ($) | May 31, 2020USD ($) | Oct. 31, 2019USD ($) |
Line of Credit Facility | |||||||||||||
Long-term debt reclassified to current maturities | $ 12,954,538 | $ 1,405,406 | |||||||||||
Loan received | $ 1,299,593 | ||||||||||||
Heron Lake BioEnergy, LLC | Amended revolving term note payable to lending institution | 2020 Credit Facility | |||||||||||||
Line of Credit Facility | |||||||||||||
Credit facility maximum | $ 13,000,000 | $ 8,000,000 | |||||||||||
Long-term debt reclassified to current maturities | $ 10,300,000 | ||||||||||||
Heron Lake BioEnergy, LLC | Amended revolving term note payable to lending institution | 2020 Credit Facility | One Month LIBOR | |||||||||||||
Line of Credit Facility | |||||||||||||
Spread above variable interest rate | 3.35% | ||||||||||||
Heron Lake BioEnergy, LLC | Amended revolving term note payable to lending institution | 2020 Credit Facility | Minimum | |||||||||||||
Line of Credit Facility | |||||||||||||
Interest rate, stated percentage | 0.00% | ||||||||||||
Heron Lake BioEnergy, LLC | CoBank | 2020 Credit Facility | |||||||||||||
Line of Credit Facility | |||||||||||||
Annual fee | $ 2,500 | ||||||||||||
Heron Lake BioEnergy, LLC | Single advance term note payable to lending institution | |||||||||||||
Line of Credit Facility | |||||||||||||
Aggregate principal amount available for borrowing | $ 3,000,000 | ||||||||||||
Interest rate (as a percent) | 3.80% | ||||||||||||
Number of semi-annual installments | installment | 10 | ||||||||||||
Heron Lake BioEnergy, LLC | Seasonal revolving term loan | |||||||||||||
Line of Credit Facility | |||||||||||||
Working capital covenants | $ 10,000,000 | $ 10,000,000 | $ 9,000,000 | ||||||||||
Aggregate principal amount available for borrowing | $ 13,000,000 | ||||||||||||
Line of credit unused commitment fee (as a percent) | 0.50% | ||||||||||||
Heron Lake BioEnergy, LLC | Seasonal revolving term loan | One Month LIBOR | |||||||||||||
Line of Credit Facility | |||||||||||||
Interest rate (as a percent) | 3.51% | ||||||||||||
Heron Lake BioEnergy, LLC | Seasonal revolving term loan | 2020 Credit Facility | |||||||||||||
Line of Credit Facility | |||||||||||||
Working capital covenants | $ 10,000,000 | $ 8,000,000 | |||||||||||
Heron Lake BioEnergy, LLC | Seasonal revolving term loan | 2018 Credit Facility | |||||||||||||
Line of Credit Facility | |||||||||||||
Working capital covenants | $ 10,000,000 | ||||||||||||
Heron Lake BioEnergy, LLC | SBA Paycheck Protection Loan | |||||||||||||
Line of Credit Facility | |||||||||||||
Loan received | $ 595,693 | $ 703,900 | |||||||||||
Interest rate, stated percentage | 1.00% | 1.00% | |||||||||||
Repayment term | 2 years | 2 years | |||||||||||
Heron Lake BioEnergy, LLC | Short Term Revolving Promissory Note | |||||||||||||
Line of Credit Facility | |||||||||||||
Credit facility maximum | $ 5,000,000 | ||||||||||||
Interest rate (as a percent) | 0.00% | ||||||||||||
Line of credit unused commitment fee (as a percent) | 0.50% | ||||||||||||
Heron Lake BioEnergy, LLC | Short Term Revolving Promissory Note | One Month LIBOR | |||||||||||||
Line of Credit Facility | |||||||||||||
Spread above variable interest rate | 3.35% |
DEBT FACILITIES (Details)
DEBT FACILITIES (Details) - USD ($) | 12 Months Ended | |||
Oct. 31, 2020 | Oct. 31, 2019 | Apr. 18, 2020 | Apr. 17, 2020 | |
Line of Credit Facility | ||||
Long-term Debt | $ 18,830,856 | $ 8,044,894 | ||
Less: amounts due within one year | 12,954,538 | 1,405,406 | ||
Net long term debt | 5,876,318 | 6,639,488 | ||
Term note payable to Project Hawkeye | Granite Falls Energy, LLC Excluding Heron Lake BioEnergy, LLC | ||||
Line of Credit Facility | ||||
Long-term Debt | 6,339,286 | 7,410,714 | ||
SBA Paycheck Protection Loan | Granite Falls Energy, LLC Excluding Heron Lake BioEnergy, LLC | ||||
Line of Credit Facility | ||||
Long-term Debt | 703,900 | |||
SBA Paycheck Protection Loan | Heron Lake BioEnergy, LLC | ||||
Line of Credit Facility | ||||
Long-term Debt | 595,693 | |||
Interest rate (as a percent) | 1.00% | 1.00% | ||
Amended revolving term note payable to lending institution | Heron Lake BioEnergy, LLC | ||||
Line of Credit Facility | ||||
Long-term Debt | 7,891,426 | |||
Single advance term note payable to lending institution | Heron Lake BioEnergy, LLC | ||||
Line of Credit Facility | ||||
Long-term Debt | 3,000,000 | |||
Assessments payable as part of water treatment agreement, with interest at 6.55%, due in 2021 | Heron Lake BioEnergy, LLC | ||||
Line of Credit Facility | ||||
Long-term Debt | 300,551 | 634,180 | ||
Payment | $ 189,393 | $ 189,393 | ||
Interest rate (as a percent) | 6.55% | 6.55% | ||
Period of worth of debt | 1 year | 1 year | ||
Deposit on debt service payments | $ 364,000 | $ 364,000 |
DEBT FACILITIES - Estimated Ann
DEBT FACILITIES - Estimated Annual Maturities (Details) - USD ($) | Oct. 31, 2020 | Oct. 31, 2019 |
DEBT FACILITIES | ||
2021 | $ 12,954,538 | |
2022 | 1,679,890 | |
2023 | 1,071,429 | |
2024 | 1,071,429 | |
2025 | 1,071,429 | |
Thereafter | 982,141 | |
Long-term Debt | $ 18,830,856 | $ 8,044,894 |
MEMBERS' EQUITY (Details)
MEMBERS' EQUITY (Details) | 1 Months Ended | 12 Months Ended | |
Dec. 31, 2018USD ($)$ / shares | Oct. 31, 2020item$ / sharesshares | Oct. 31, 2019USD ($)$ / sharesshares | |
Number of classes of membership units | item | 1 | ||
Membership Units, Par value | $ / shares | $ 0 | ||
Common Units Authorized | shares | 30,606 | 30,606 | |
Common Units Issued | shares | 30,606 | 30,606 | |
Common Units Outstanding | shares | 30,606 | 30,606 | |
Distribution per unit declared (in dollars per unit) | $ / shares | $ 40 | ||
Amount of distribution declared | $ | $ 1,224,226 | ||
Granite Falls Energy, LLC Excluding Heron Lake BioEnergy, LLC | |||
Distribution per unit declared (in dollars per unit) | $ / shares | $ 40 | ||
Amount of distribution declared | $ | $ 1,224,000 |
LEASES (Details)
LEASES (Details) - USD ($) | 12 Months Ended | ||
Oct. 31, 2020 | Oct. 31, 2019 | Nov. 01, 2019 | |
Leases | |||
Right of use assets | $ 19,383,654 | ||
Lease liabilities | $ 19,383,654 | ||
Weighted average discount rate | 4.87% | 4.87% | |
Weighted average remaining lease term | 4 years | 4 years | |
Minimum | |||
Leases | |||
Remaining term | 1 year | ||
Maximum | |||
Leases | |||
Remaining term | 7 years | ||
ASU 2016-02 | |||
Leases | |||
Right of use assets | $ 23,600,000 | ||
Lease liabilities | $ 23,600,000 | ||
Granite Falls Energy, LLC Excluding Heron Lake BioEnergy, LLC | Cost of Goods Sold | |||
Leases | |||
Operating lease costs | $ 3,181,000 | $ 3,121,000 | |
Heron Lake BioEnergy, LLC | Cost of Goods Sold | |||
Leases | |||
Operating lease costs | $ 2,331,000 | $ 2,374,000 |
LEASES - Future minimum lease p
LEASES - Future minimum lease payments (Details) | Oct. 31, 2020USD ($) |
Remaining annual maturities of operating lease liabilities | |
2021 | $ 4,459,300 |
2022 | 4,315,800 |
2023 | 4,056,600 |
2024 | 3,442,200 |
2025 | 3,034,200 |
Thereafter | 2,677,450 |
Totals | 21,985,550 |
Less: Amount representing interest | 2,601,896 |
Lease liabilities | $ 19,383,654 |
EMPLOYEE BENEFIT PLANS (Details
EMPLOYEE BENEFIT PLANS (Details) - USD ($) | 12 Months Ended | |
Oct. 31, 2020 | Oct. 31, 2019 | |
Granite Falls Energy, LLC Excluding Heron Lake BioEnergy, LLC | ||
Defined Contribution Plan Disclosure [Line Items] | ||
Employer match (as a percent) | 50.00% | |
Percentage of employee's salary (as a percent) | 3.00% | |
Employer contribution | $ 76,000 | $ 67,000 |
Heron Lake Bio-energy LLC | ||
Defined Contribution Plan Disclosure [Line Items] | ||
Employer match (as a percent) | 50.00% | |
Percentage of employee's salary (as a percent) | 4.00% | |
Employer contribution | $ 89,000 | $ 92,000 |
INCOME TAXES (Details)
INCOME TAXES (Details) - USD ($) | Oct. 31, 2020 | Oct. 31, 2019 |
INCOME TAXES | ||
Total Assets | $ 116,197,703 | $ 106,054,709 |
Organization & start-up costs capitalized for tax purposes, net | 12,415 | 89,389 |
Tax depreciation greater than book depreciation | (6,156,300) | (9,349,983) |
Unrealized derivatives (gains) losses of commodity derivative instruments | (40,900) | (727,275) |
Capitalized inventory | 35,777 | 52,927 |
Operating lease right of use assets | (10,092,405) | |
Net effect of consolidation of acquired subsidiary | (37,161,919) | (28,135,408) |
Income tax basis of assets | 62,794,371 | 67,984,359 |
Financial Statement basis of liabilities | 54,305,876 | 21,370,160 |
Accrued rail car maintenance | (825,000) | (825,000) |
Other accruals | (122,041) | (84,383) |
Operating lease liability | (10,092,405) | |
Net effect of consolidation of acquired subsidiary | (10,065,001) | (734,890) |
Income tax basis of liabilities | $ 33,201,429 | $ 19,725,887 |
RELATED PARTY TRANSACTIONS - (D
RELATED PARTY TRANSACTIONS - (Details) - Board of Governors - USD ($) | 12 Months Ended | |
Oct. 31, 2020 | Oct. 31, 2019 | |
Granite Falls Energy, LLC Excluding Heron Lake BioEnergy, LLC | ||
Related party transactions | ||
Purchased from related party | $ 3,099,000 | $ 4,896,000 |
Accounts payable to related party | 353,000 | 75,000 |
Heron Lake BioEnergy, LLC | ||
Related party transactions | ||
Purchased from related party | 12,545,000 | 11,478,000 |
Accounts payable to related party | $ 171,000 | $ 470,000 |
COMMITMENTS AND CONTINGENCIES (
COMMITMENTS AND CONTINGENCIES (Details) | 1 Months Ended | 3 Months Ended | 12 Months Ended | ||||
Sep. 30, 2019USD ($)$ / Energy_per_Durationgal | May 31, 2019 | Jul. 31, 2016item | Oct. 31, 2020USD ($)MMBTUmiitembu | Oct. 31, 2019USD ($)bu | Oct. 31, 2007USD ($) | Oct. 31, 2006USD ($) | |
Ethanol Marketing Agreement With Eco-Energy, Inc. [Member] | |||||||
Commitments and contingencies | |||||||
Fees and commissions | $ 589,000 | $ 1,183,000 | |||||
RPMG, Inc. Marketing Agreement [Member] | Corn oil | |||||||
Commitments and contingencies | |||||||
Fees and commissions | $ 138,000 | 154,000 | |||||
Unrelated Company Construction And Maintenance Agreement [Member] | Minimum | |||||||
Commitments and contingencies | |||||||
Minimum volume of natural gas Company to receive annually | MMBTU | 1,400,000 | ||||||
Granite Falls Energy, LLC Excluding Heron Lake BioEnergy, LLC | |||||||
Commitments and contingencies | |||||||
Rail Car Rehabilitation Liability | $ 825,000 | 825,000 | |||||
Granite Falls Energy, LLC Excluding Heron Lake BioEnergy, LLC | Board of Governors | |||||||
Commitments and contingencies | |||||||
Amount of corn purchased | $ 3,099,000 | $ 4,896,000 | |||||
Granite Falls Energy, LLC Excluding Heron Lake BioEnergy, LLC | Corn Contracts | |||||||
Commitments and contingencies | |||||||
Quantity of commitment | bu | 4,275,000 | 7,495,000 | |||||
Granite Falls Energy, LLC Excluding Heron Lake BioEnergy, LLC | Corn Contracts | Short/Sale position | |||||||
Commitments and contingencies | |||||||
Quantity of commitment | bu | 3,515,000 | 4,150,000 | |||||
Granite Falls Energy, LLC Excluding Heron Lake BioEnergy, LLC | Corn Contracts | Long/Purchase position | |||||||
Commitments and contingencies | |||||||
Quantity of commitment | bu | 760,000 | 3,345,000 | |||||
Granite Falls Energy, LLC Excluding Heron Lake BioEnergy, LLC | Ethanol Contracts | Short/Sale position | |||||||
Commitments and contingencies | |||||||
Concentration percentage | 84.00% | ||||||
Value of commitment | $ 11,780,000 | ||||||
Granite Falls Energy, LLC Excluding Heron Lake BioEnergy, LLC | Distillers' Grains | Short/Sale position | |||||||
Commitments and contingencies | |||||||
Concentration percentage | 50.00% | ||||||
Value of commitment | $ 5,948,000 | ||||||
Granite Falls Energy, LLC Excluding Heron Lake BioEnergy, LLC | Corn oil | Short/Sale position | |||||||
Commitments and contingencies | |||||||
Concentration percentage | 45.00% | ||||||
Value of commitment | $ 681,000 | ||||||
Granite Falls Energy, LLC Excluding Heron Lake BioEnergy, LLC | Hopper rail cars | |||||||
Commitments and contingencies | |||||||
Equipment Lease, Quantity | item | 75 | ||||||
Granite Falls Energy, LLC Excluding Heron Lake BioEnergy, LLC | Corn Forward Cash and Basis Contracts Purchase Commitments | |||||||
Commitments and contingencies | |||||||
Quantity of commitment | bu | 3,995,000 | ||||||
Asset impairment charges | $ 0 | $ 0 | |||||
Granite Falls Energy, LLC Excluding Heron Lake BioEnergy, LLC | Ethanol Marketing Agreement With Eco-Energy, Inc. [Member] | |||||||
Commitments and contingencies | |||||||
Term of renewal periods | 1 year | ||||||
Granite Falls Energy, LLC Excluding Heron Lake BioEnergy, LLC | Ethanol Marketing Agreement With Eco-Energy, Inc. [Member] | Minimum | |||||||
Commitments and contingencies | |||||||
Written notice for termination of agreement | 90 days | ||||||
Granite Falls Energy, LLC Excluding Heron Lake BioEnergy, LLC | Ethanol Marketing Agreement With Eco-Energy, Inc. [Member] | Rail Cars | |||||||
Commitments and contingencies | |||||||
Equipment Lease, Quantity | item | 43 | ||||||
Granite Falls Energy, LLC Excluding Heron Lake BioEnergy, LLC | RPMG, Inc. Marketing Agreement [Member] | Distillers' Grains | |||||||
Commitments and contingencies | |||||||
Initial term | 1 year | ||||||
Fees and commissions | $ 255,000 | 287,000 | |||||
Granite Falls Energy, LLC Excluding Heron Lake BioEnergy, LLC | RPMG, Inc. Marketing Agreement [Member] | Distillers' Grains | Minimum | |||||||
Commitments and contingencies | |||||||
Written notice for termination of agreement | 90 days | ||||||
Granite Falls Energy, LLC Excluding Heron Lake BioEnergy, LLC | RPMG, Inc. Marketing Agreement [Member] | Corn oil | Minimum | |||||||
Commitments and contingencies | |||||||
Written notice for termination of agreement | 90 days | ||||||
Initial term | 1 year | ||||||
Granite Falls Energy, LLC Excluding Heron Lake BioEnergy, LLC | Unrelated Company Construction And Maintenance Agreement [Member] | |||||||
Commitments and contingencies | |||||||
Distance of natural gas pipeline | mi | 9.5 | ||||||
Granite Falls Energy, LLC Excluding Heron Lake BioEnergy, LLC | Farm Credit Services PCA | |||||||
Commitments and contingencies | |||||||
Credit facility maximum | $ 500,000 | ||||||
Remaining borrowing capacity | $ 500,000 | ||||||
Interest rate (as a percent) | 3.14% | ||||||
Granite Falls Energy, LLC Excluding Heron Lake BioEnergy, LLC | Farm Credit Services PCA | One Month LIBOR | |||||||
Commitments and contingencies | |||||||
Spread above variable interest rate | 3.00% | ||||||
Heron Lake BioEnergy, LLC | |||||||
Commitments and contingencies | |||||||
Rail Car Rehabilitation Liability | $ 597,000 | 551,000 | |||||
Heron Lake BioEnergy, LLC | Board of Governors | |||||||
Commitments and contingencies | |||||||
Amount of corn purchased | $ 12,545,000 | $ 11,478,000 | |||||
Heron Lake BioEnergy, LLC | Corn Contracts | |||||||
Commitments and contingencies | |||||||
Quantity of commitment | bu | 2,095,000 | 5,398,000 | |||||
Heron Lake BioEnergy, LLC | Corn Contracts | Short/Sale position | |||||||
Commitments and contingencies | |||||||
Quantity of commitment | bu | 1,770,000 | 3,267,000 | |||||
Heron Lake BioEnergy, LLC | Corn Contracts | Long/Purchase position | |||||||
Commitments and contingencies | |||||||
Quantity of commitment | bu | 325,000 | 2,131,000 | |||||
Heron Lake BioEnergy, LLC | Ethanol Contracts | Short/Sale position | |||||||
Commitments and contingencies | |||||||
Concentration percentage | 88.00% | ||||||
Value of commitment | $ 12,350,000 | ||||||
Heron Lake BioEnergy, LLC | Distillers' Grains | Short/Sale position | |||||||
Commitments and contingencies | |||||||
Concentration percentage | 45.00% | ||||||
Value of commitment | $ 5,356,000 | ||||||
Heron Lake BioEnergy, LLC | Corn oil | Short/Sale position | |||||||
Commitments and contingencies | |||||||
Concentration percentage | 80.00% | ||||||
Value of commitment | $ 633,000 | ||||||
Heron Lake BioEnergy, LLC | Hopper rail cars | |||||||
Commitments and contingencies | |||||||
Equipment Lease, Quantity | item | 50 | ||||||
Heron Lake BioEnergy, LLC | Corn Forward Cash and Basis Contracts Purchase Commitments | |||||||
Commitments and contingencies | |||||||
Quantity of commitment | bu | 2,462,000 | ||||||
Asset impairment charges | $ 47,000 | $ 0 | |||||
Heron Lake BioEnergy, LLC | Ethanol Marketing Agreement With Eco-Energy, Inc. [Member] | |||||||
Commitments and contingencies | |||||||
Number of terms agreement automatically renews | item | 3 | ||||||
Term of renewal periods | 3 years | 1 year | |||||
Percentage of products produced by the entity | 100.00% | ||||||
Heron Lake BioEnergy, LLC | Ethanol Marketing Agreement With Eco-Energy, Inc. [Member] | Minimum | |||||||
Commitments and contingencies | |||||||
Written notice for termination of agreement | 3 months | 90 days | |||||
Heron Lake BioEnergy, LLC | RPMG, Inc. Marketing Agreement [Member] | Corn oil | |||||||
Commitments and contingencies | |||||||
Initial term | 1 year | ||||||
Heron Lake BioEnergy, LLC | RPMG, Inc. Marketing Agreement [Member] | Corn oil | Minimum | |||||||
Commitments and contingencies | |||||||
Written notice for termination of agreement | 90 days | ||||||
Heron Lake BioEnergy, LLC | Gavilon Ingredients, LLC. Agreement [Member] | |||||||
Commitments and contingencies | |||||||
Initial term | 6 months | ||||||
Fees and commissions | $ 187,000 | 287,000 | |||||
Heron Lake BioEnergy, LLC | Gavilon Ingredients, LLC. Agreement [Member] | Minimum | |||||||
Commitments and contingencies | |||||||
Written notice for termination of agreement | 60 days | ||||||
Heron Lake BioEnergy, LLC | Northern Border Pipeline Company [Member] | |||||||
Commitments and contingencies | |||||||
Distance of the natural gas pipeline from the ethanol plant | mi | 16 | ||||||
Heron Lake BioEnergy, LLC | Water Agreement | |||||||
Commitments and contingencies | |||||||
Monthly base fee paid | $ 1,500 | ||||||
Initial term | 2 years | 30 years | |||||
Term of agreement | 10 years | ||||||
Initial volume per minute of capacity that is available from the well for which the entity has exclusive rights (in gallons) | gal | 600 | ||||||
Flow charges (in dollar $ percent) | $ / Energy_per_Duration | 0.60 | ||||||
Operating and maintenance expenses capped | $ 300,000 | $ 300,000 | |||||
Percentage in excess of operating and maintenance cost capped | 55.00% | ||||||
Average term | 2 years | ||||||
City's water well bond payments | $ 735,000 | ||||||
Administrative fee to be paid as water usage fees (as a percent) | 5.00% | ||||||
Administrative fee | $ 594,000 | ||||||
Percentage of profit to be paid as water usage fees | 10.00% | ||||||
Assessment | $ 367,000 | $ 500,000 | $ 3,550,000 | ||||
Operating and administrative/maintenance expenses paid | $ 12,000 | $ 77,000 | $ 52,000 |